[Title 29 CFR ]
[Code of Federal Regulations (annual edition) - July 1, 2003 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

   

                    29


          Parts 500 to 899

                         Revised as of July 1, 2003

Labor





          Containing a codification of documents of general 
          applicability and future effect
          As of July 1, 2003
          With Ancillaries
          Published by
          Office of the Federal Register
          National Archives and Records
          Administration

A Special Edition of the Federal Register



[[Page ii]]

                                      




                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003



  For sale by the Superintendent of Documents, U.S. Government Printing 
                                  Office
  Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area 
                              (202) 512-1800
      Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001



[[Page iii]]




                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 29:
    Subtitle B--Regulations Relating to Labor (Continued)
          Chapter V--Wage and Hour Division, Department of 
          Labor                                                      5
  Finding Aids:
      Material Approved for Incorporation by Reference........     849
      Table of CFR Titles and Chapters........................     851
      Alphabetical List of Agencies Appearing in the CFR......     869
      List of CFR Sections Affected...........................     879



[[Page iv]]


      


                     ----------------------------

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  29 CFR 500.0 refers 
                       to title 29, part 500, 
                       section 0.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, July 1, 2003), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 2001, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, 1973-1985, or 1986-2000, published in 11 separate 
volumes. For the period beginning January 1, 2001, a ``List of CFR 
Sections Affected'' is published at the end of each CFR volume.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
requirement to publish regulations in the Federal Register by referring 
to materials already published elsewhere. For an incorporation to be 
valid, the Director of the Federal Register must approve it. The legal 
effect of incorporation by reference is that the material is treated as 
if it were published in full in the Federal Register (5 U.S.C. 552(a)). 
This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    Properly approved incorporations by reference in this volume are 
listed in the Finding Aids at the end of this volume.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed in 
the Finding Aids of this volume as an approved incorporation by 
reference, please contact the agency that issued the regulation 
containing that incorporation. If, after contacting the agency, you find 
the material is not available, please notify the Director of the Federal 
Register, National Archives and Records Administration, Washington DC 
20408, or call (202) 741-6010.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I). A list of CFR titles, chapters, 
and parts and an alphabetical list of agencies publishing in the CFR are 
also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

[[Page vii]]


REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-741-6000 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408 or e-mail 
info@fedreg.nara.gov.

SALES

    The Government Printing Office (GPO) processes all sales and 
distribution of the CFR. For payment by credit card, call toll free, 
866-512-1800 or DC area, 202-512-1800, M-F, 8 a.m. to 4 p.m. e.s.t. or 
fax your order to 202-512-2250, 24 hours a day. For payment by check, 
write to the Superintendent of Documents, Attn: New Orders, P.O. Box 
371954, Pittsburgh, PA 15250-7954. For GPO Customer Service call 202-
512-1803.

ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, The United States 
Government Manual, the Federal Register, Public Laws, Public Papers, 
Weekly Compilation of Presidential Documents and the Privacy Act 
Compilation are available in electronic format at www.access.gpo.gov/
nara (``GPO Access''). For more information, contact Electronic 
Information Dissemination Services, U.S. Government Printing Office. 
Phone 202-512-1530, or 888-293-6498 (toll-free). E-mail, 
gpoaccess@gpo.gov.
    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public law numbers, Federal Register finding aids, and related 
information. Connect to NARA's web site at www.archives.gov/federal--
register. The NARA site also contains links to GPO Access.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

July 1, 2003.



[[Page ix]]



                               THIS TITLE

    Title 29--Labor is composed of nine volumes. The parts in these 
volumes are arranged in the following order: parts 0-99, parts 100-499, 
parts 500-899, parts 900-1899, parts 1900-1910.999, part 1910.1000-End, 
parts 1911-1925, part 1926, and part 1927 to end. The contents of these 
volumes represent all current regulations codified under this title as 
of July 1, 2003.

    The OMB control numbers for title 29 CFR part 1910 appear in 
Sec. 1910.8. For the convenience of the user, Sec. 1910.8 appears in the 
Finding Aids section of the volume containing Sec. 1910.1000 to the end.

    Subject indexes appear following the occupational safety and health 
standards (part 1910), and following the safety and health regulations 
for: Longshoring (part 1918), Gear Certification (part 1919), and 
Construction (part 1926).

[[Page x]]




[[Page 1]]



                             TITLE 29--LABOR




                  (This book contains parts 500 to 899)

  --------------------------------------------------------------------

          SUBTITLE B--Regulations Relating to Labor (Continued)

                                                                    Part

chapter v--Wage and Hour Division, Department of Labor......         500

Cross References: Railroad Retirement Board: See Employees' Benefits, 20 
  CFR chapter II.

  Social Security Administration, Department of Health and Human 
Services: See Employees' Benefits, 20 CFR chapter III.

  Other regulations issued by the Department of Labor appear in 20 CFR 
chapters I, IV, V, VI, VII, and IX; 29 CFR subtitle A, chapters II, IV, 
V, XVII, and XXV; 30 CFR chapter I; 41 CFR chapters 50, 60, and 61. For 
Standards for a Merit System of Personnel Administration: See 5 CFR part 
900, subpart F.

[[Page 3]]

          Subtitle B--Regulations Relating to Labor (Continued)

[[Page 5]]



         CHAPTER V--WAGE AND HOUR DIVISION, DEPARTMENT OF LABOR




  --------------------------------------------------------------------

                        SUBCHAPTER A--REGULATIONS
Part                                                                Page
500             Migrant and seasonal agricultural worker 
                    protection..............................           9
501             Enforcement of contractual obligations for 
                    temporary alien agricultural workers 
                    admitted under section 216 of the 
                    Immigration and Nationality Act.........          53
504             Attestations by facilities using 
                    nonimmigrant aliens as registered nurses          64
505             Labor standards on projects or productions 
                    assisted by grants from the National 
                    Endowments for the Arts and Humanities..          64
506             Attestations by employers using alien 
                    crewmembers for longshore activities in 
                    U.S. ports..............................          69
507             Labor condition applications and 
                    requirements for employers using 
                    nonimmigrants on H-1B specialty visas in 
                    specialty occupations and as fashion 
                    models..................................          69
508             Attestations filed by employers utilizing F-
                    1 students for off-campus work..........          70
510             Implementation of the minimum wage 
                    provisions of the 1989 amendments to the 
                    Fair Labor Standards Act in Puerto Rico.          70
511             Wage order procedure for American Samoa.....          92
515             Utilization of State agencies for 
                    investigations and inspections..........          98
516             Records to be kept by employers.............         100
519             Employment of full-time students at 
                    subminimum wages........................         113
520             Employment under special certificate of 
                    messengers, learners (including student-
                    learners), and apprentices..............         124
521-523         [Reserved]

[[Page 6]]

525             Employment of workers with disabilities 
                    under special certificates..............         136
527             [Reserved]
528             Annulment or withdrawal of certificates for 
                    the employment of student-learners, 
                    apprentices, learners, messengers, 
                    handicapped persons, student-workers, 
                    and full-time students in agriculture or 
                    in retail or service establishments at 
                    special minimum wage rates..............         147
530             Employment of homeworkers in certain 
                    industries..............................         149
531             Wage payments under the Fair Labor Standards 
                    Act of 1938.............................         162
536             Area of production..........................         175
541             Defining and delimiting the terms ``Any 
                    employee employed in a bona fide 
                    executive, administrative, or 
                    professional capacity (including any 
                    employee employed in the capacity of 
                    academic administrative personnel or 
                    teacher in elementary or secondary 
                    schools), or in the capacity of outside 
                    salesman''..............................         177
547             Requirements of a ``Bona fide thrift or 
                    savings plan''..........................         230
548             Authorization of established basic rates for 
                    computing overtime pay..................         231
549             Requirements of a ``Bona fide profit-sharing 
                    plan or trust''.........................         246
550             Defining and delimiting the term ``Talent 
                    fees''..................................         248
551             Local delivery drivers and helpers; wage 
                    payment plans...........................         249
552             Application of the Fair Labor Standards Act 
                    to domestic service.....................         253
553             Application of the Fair Labor Standards Act 
                    to employees of State and local 
                    governments.............................         259
570             Child labor regulations, orders and 
                    statements of interpretation............         283
575             Waiver of child labor provisions for 
                    agricultural employment of 10 and 11 
                    year old minors in hand harvesting of 
                    short season crops......................         324
578             Minimum wage and overtime violations--civil 
                    money penalties.........................         329
579             Child labor violations--civil money 
                    penalties...............................         331
580             Civil money penalties--procedures for 
                    assessing and contesting penalties......         335

[[Page 7]]

697             Industries in American Samoa................         340
    SUBCHAPTER B--STATEMENTS OF GENERAL POLICY OR INTERPRETATION NOT 
                     DIRECTLY RELATED TO REGULATIONS
775             General.....................................         343
776             Interpretative bulletin on the general 
                    coverage of the wage and hours 
                    provisions of the Fair Labor Standards 
                    Act of 1938.............................         343
778             Overtime compensation.......................         382
779             The Fair Labor Standards Act as applied to 
                    retailers of goods or services..........         437
780             Exemptions applicable to agriculture, 
                    processing of agricultural commodities, 
                    and related subjects under the Fair 
                    Labor Standards Act.....................         539
782             Exemption from maximum hours provisions for 
                    certain employees of motor carriers.....         612
783             Application of the Fair Labor Standards Act 
                    to employees employed as seamen.........         628
784             Provisions of the Fair Labor Standards Act 
                    applicable to fishing and operations on 
                    aquatic products........................         644
785             Hours worked................................         670
786             Miscellaneous exemptions....................         682
788             Forestry or logging operations in which not 
                    more than eight employees are employed..         683
789             General statement on the provisions of 
                    section 12(a) and section 15(a)(1) of 
                    the Fair Labor Standards Act of 1938, 
                    relating to written assurances..........         687
790             General statement as to the effect of the 
                    Portal-to-Portal Act of 1947 on the Fair 
                    Labor Standards Act of 1938.............         692
791             Joint employment relationship under Fair 
                    Labor Standards Act of 1938.............         717
793             Exemption of certain radio and television 
                    station employees from overtime pay 
                    requirements under section 13(b)(9) of 
                    the Fair Labor Standards Act............         718
794             Partial overtime exemption for employees of 
                    wholesale or bulk petroleum distributors 
                    under section 7(b)(3) of the Fair Labor 
                    Standards Act...........................         724
                        SUBCHAPTER C--OTHER LAWS
801             Application of the Employee Polygraph 
                    Protection Act of 1988..................         744

[[Page 8]]

825             The Family and Medical Leave Act of 1993....         773
                  SUBCHAPTER D--GARNISHMENT OF EARNINGS
870             Restriction on garnishment..................         840
871-899         [Reserved]

[[Page 9]]



                        SUBCHAPTER A--REGULATIONS





PART 500--MIGRANT AND SEASONAL AGRICULTURAL WORKER PROTECTION--Table of Contents




                      Subpart A--General Provisions

Sec.
500.0  Introduction.
500.1  Purpose and scope.
500.2  Compliance with State laws and regulations.
500.3  Effective date of the Act; transition period; repeal of the Farm 
          Labor Contractor Registration Act.
500.4  Effect of prior judgments and final orders obtained under the 
          Farm Labor Contractor Registration Act.
500.5  Filing of applications, notices and documents.
500.6  Accuracy of information, statements and data.
500.7  Investigation authority of the Secretary.
500.8  Prohibition on interference with Department of Labor officials.
500.9  Discrimination prohibited.
500.10  Waiver of rights prohibited.
500.20  Definitions.

                  Applicability of the Act: Exemptions

500.30  Persons not subject to the Act.

Subpart B--Registration of Farm Labor Contractors and Employees of Farm 
     Labor Contractors Engaged in Farm Labor Contracting Activities

                   Registration Requirements: General

500.40  Registration in general.
500.41  Farm labor contractor is responsible for actions of his farm 
          labor contractor employee.
500.42  Certificate of Registration to be carried and exhibited.
500.43  Effect of failure to produce certificate.

    Applications and Renewal of Farm Labor Contractor and Farm Labor 
                    Contractor Employee Certificates

500.44  Form of application.
500.45  Contents of application.
500.46  Filing an application.
500.47  Place for filing application.

                          Action on Application

500.48  Issuance of certificate.
500.50  Duration of certificate.
500.51  Refusal to issue or to renew, or suspension or revocation of 
          certificate.
500.52  Right to hearing.
500.53  Nontransfer of certificate.
500.54  Change of address.
500.55  Changes to or amendments of certificate authority.
500.56  Replacement of Certificate of Registration or Farm Labor 
          Contractor Employee Certificate.

    Additional Obligations of Farm Labor Contractors and Farm Labor 
                          Contractor Employees

500.60  Farm labor contractors' recruitment, contractual and general 
          obligations.
500.61  Farm Labor contractors must comply with all worker protections 
          and all other statutory provisions.
500.62  Obligations of a person holding a valid Farm Labor Contractor 
          Employee Certificate of Registration.

                      Subpart C--Worker Protections

                                 General

500.70  Scope of worker protections.
500.71  Utilization of only registered farm labor contractors.
500.72  Agreements with workers.
500.73  Required purchase of goods or services solely from any person 
          prohibited.

  Recruiting, Hiring and Providing Information to Migrant Agricultural 
                                 Workers

500.75  Disclosure of information.

    Hiring and Providing Information to Seasonal Agricultural Workers

500.76  Disclosure of information.

                    Employment Information Furnished

500.77  Accuracy of information furnished.
500.78  Information in foreign language.

                       Wages and Payroll Standards

500.80  Payroll records required.
500.81  Payment of wages when due.

  Subpart D--Motor Vehicle Safety and Insurance for Transportation of 
Migrant and Seasonal Agricultural Workers, Housing Safety and Health for 
                             Migrant Workers

                          Motor Vehicle Safety

500.100  Vehicle safety obligations.
500.101  Promulgation and adoption of vehicle standards.
500.102  Applicability of vehicle safety standards.
500.103  Activities not subject to vehicle safety standards.

[[Page 10]]

500.104  Department of Labor standards for passenger automobiles and 
          station wagons and transporation of seventy-five miles or 
          less.
500.105  DOT standards adopted by the Secretary.

                                Insurance

500.120  Insurance policy or liability bond is required for each vehicle 
          used to transport any migrant or seasonal agricultural worker.
500.121  Coverage and level of insurance required.
500.122  Adjustments in insurance requirements when workers' 
          compensation coverage is provided under State law.
500.123  Property damage insurance required.
500.124  Liability bond in lieu of insurance policy.
500.125  Qualifications and eligibility of insurance carrier or surety.
500.126  Duration of insurance or liability bond.
500.127  Limitations on cancellation of insurance or liability bond of 
          registered farm labor contractors.
500.128  Cancellation of insurance policy or liability bond not relief 
          from insurance requirements.

                        Housing Safety and Health

500.130  Application and scope of safety and health requirement.
500.131  Exclusion from housing safety and health requirement.
500.132  Applicable Federal standards: ETA and OSHA housing standards.
500.133  Substantive Federal and State safety and health standards 
          defined.
500.134  Compliance with State standards.
500.135  Certificate of housing inspection.

                         Subpart E--Enforcement

500.140  General.
500.141  Concurrent actions.
500.142  Representation of the Secretary.
500.143  Civil money penalty assessment.
500.144  Civil money penalties--payment and collection.
500.145  Registration determinations.
500.146  Continuation of matters involving violations of FLCRA.
500.147  Continuation of matters involving violations of section 106 of 
          MSPA.

               Agreements With Federal and State Agencies

500.155  Authority.
500.156  Scope of agreements with Federal agencies.
500.157  Scope of agreements with State agencies.
500.158  Functions delegatable.
500.159  Submission of plan.
500.160  Approved State plans.
500.161  Audits.
500.162  Reports.

                         Central Public Registry

500.170  Establishment of registry.

                  Subpart F--Administrative Proceedings

                                 General

500.200  Establishment of procedures and rules of practice.
500.201  Applicability of procedures and rules.

                     Procedures Relating to Hearing

500.210  Written notice of determination required.
500.211  Contents of notice.
500.212  Request for hearing.

               Procedures Relating to Substituted Service

500.215  Change of address.
500.216  Substituted service.
500.217  Responsibility of Secretary for service.

                            Rules of Practice

500.219  General.
500.220  Service of determinations and computation of time.
500.221  Commencement of proceeding.
500.222  Designation of record.
500.223  Caption of proceeding.

                          Referral for Hearing

500.224  Referral to Administrative Law Judge.
500.225  Notice of docketing.
500.226  Service upon attorneys for the Department of Labor--number of 
          copies.

               Procedures Before Administrative Law Judge

500.231  Appearances; representation of the Department of Labor.
500.232  Consent findings and order.

                         Post-Hearing Procedures

500.262  Decision and order of Administrative Law Judge.

      Modification or Vacation of Order of Administrative Law Judge

500.263  Authority of the Secretary.
500.264  Procedures for initiating review.
500.265  Implementation by the Secretary.
500.266  Responsibility of the Office of Administrative Law Judges.
500.267  Filing and Service.
500.268  Final decision of the Secretary.
500.269  Stay pending decision of the Secretary.

[[Page 11]]

                                 Record

500.270  Retention of official record.
500.271  Certification of official record.

    Authority: Pub. L. 97-470, 96 Stat. 2583 (29 U.S.C. 1801-1872); 
Secretary's Order No. 4-2001, 66 FR 29656.

    Source: 48 FR 36741, Aug. 12, 1983, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 500.0  Introduction.

    (a) The Migrant and Seasonal Agricultural Worker Protection Act 
(MSPA), hereinafter referred to as MSPA or the Act, repeals and replaces 
the Farm Labor Contractor Registration Act of 1963, as amended, 
hereinafter referred to as FLCRA or the Farm Labor Contractor 
Registration Act. Prior judgments and final orders obtained under FLCRA 
continue in effect as stated in Sec. 500.4.
    (b) These regulations include provisions necessitated by the 
Immigration Reform and Control Act's (IRCA) amendment to the Immigration 
and Nationality Act (INA). IRCA amended MSPA to remove section 106 
thereof prohibiting the employment of illegal aliens. Matters concerning 
certificate actions or the assessment of civil money penalties, for a 
violation of section 106 of MSPA which occurred prior to June 1, 1987, 
continue through final administrative determination as stated in 
Sec. 500.147.

[48 FR 36741, Aug. 12, 1983, as amended at 54 FR 13328, Mar. 31, 1989]



Sec. 500.1  Purpose and scope.

    (a) Congress stated, in enacting the Migrant and Seasonal 
Agricultural Worker Protection Act that ``[I]t is the purpose of this 
Act to remove the restraints on commerce caused by activities 
detrimental to migrant and seasonal agricultural workers; to require 
farm labor contractors to register under this Act; and to assure 
necessary protections for migrant and seasonal agricultural workers, 
agricultural associations, and agricultural employers.'' It authorized 
the Secretary to issue such rules and regulations as are necessary to 
carry out the Act consistent with the requirements of chapter 5 of title 
5, United States Code.
    (b) These regulations implement this purpose and policy. The 
regulations contained in this part are issued in accordance with section 
511 of the Act and establish the rules and regulations necessary to 
carry out the Act.
    (c) Any farm labor contractor, as defined in the Act, is required to 
obtain a Certificate of Registration issued pursuant to the Act from the 
Department of Labor or from a State agency authorized to issue such 
certificates on behalf of the Department of Labor. Such a farm labor 
contractor must ensure that any individual whom he employs to perform 
any farm labor contracting activities also obtains a Certificate of 
Registration. The farm labor contractor is responsible, as well, for any 
violation of the Act or these regulations by any such employee whether 
or not the employee obtains a certificate. In addition to registering, 
farm labor contractors must comply with all other applicable provisions 
of the Act when they recruit, solicit, hire, employ, furnish or 
transport or, in the case of migrant agricultural workers, provide 
housing.
    (d) Agricultural employers and agricultural associations which are 
subject to the Act must comply with all of the worker protections which 
are applicable under the Act to migrant or seasonal agricultural workers 
whom they recruit, solicit, hire, employ, furnish, or transport or, in 
the case of migrant agricultural workers, provide housing. The 
obligations will vary, depending on the types of activities affecting 
migrant or seasonal agricultural workers. Agricultural employers and 
agricultural associations and their employees need not obtain 
Certificates of Registration in order to engage in these activities, 
even if the workers they obtain are utilized by other persons or on the 
premises of another.
    (e) The Act empowers the Secretary of Labor to enforce the Act, 
conduct investigations, issue subpenas and, in the case of designated 
violations of the Act, impose sanctions. As provided in the Act, the 
Secretary is empowered, among other things, to impose an assessment and 
to collect a civil money penalty of not more than $1,000 for each 
violation, to seek a temporary or permanent restraining order in a U.S.

[[Page 12]]

District Court, and to seek the imposition of criminal penalties on 
persons who willfully and knowingly violate the Act or any regulation 
under the Act. In accordance with the Act and with these regulations, 
the Secretary may refuse to issue or to renew, or may suspend or revoke 
a certificate of registration issued to a farm labor contractor or to a 
person who engages in farm labor contracting as an employee of a farm 
labor contractor.
    (f) The facilities and services of the U.S. Employment Service, 
including State agencies, authorized by the Wagner-Peyser Act may be 
denied to any person found by a final determination by an appropriate 
enforcement agency to have violated any employment-related laws 
including MSPA when notification of this final determination has been 
provided to the Job Service by that enforcement agency. See 20 CFR 
658.501(a)(4). The facilities and services of the U.S. Employment 
Service shall be restored immediately upon compliance with 20 CFR 
658.502(a)(4).
    (g) Subparts A through E set forth the substantive regulations 
relating to farm labor contractors, agricultural employers and 
agricultural associations. These subparts cover the applicability of the 
Act, registration requirements applicable to farm labor contractors, the 
obligations of persons who hold Certificates of Registration, the worker 
protections which must be complied with by all who are subject to the 
Act, and the enforcement authority of the Secretary.
    (h) Subpart F sets forth the rules of practice for administrative 
hearings relating to actions involving Certificates of Registration. It 
also outlines the procedure to be followed for filing a challenge to a 
proposed administrative action relating to violations and summarizes the 
methods provided for collection and recovery of a civil money penalty.
    (i)(1) The Act requires that farm labor contractors obtain a 
certificate of registration from the Department of Labor prior to 
engaging in farm labor contracting activities. The Act also requires 
registration by individuals who will perform farm labor contracting 
activities for a farm labor contractor. Form WH-510 and WH-512 are the 
applications used to obtain Farm Labor Contractor and Farm Labor 
Contractor Employee Certificates of Registration. These forms have been 
approved by the Office of Management and Budget (OMB) under control 
numbers 1215-0038 (WH-510) and 1215-0037 (WH-512). Forms WH-514 and WH-
514a are used when applying for transportation authorization to furnish 
proof of compliance with vehicle safety requirements. These forms have 
been jointly cleared by OMB under control number 1215-0036.
    (2) The Act further requires disclosure to migrant and seasonal 
agricultural workers regarding wages, hours and other working conditions 
and housing when provided to migrant workers. The Department of Labor 
has developed optional forms for use in making the required disclosure. 
OMB has approved the following: Worker Information (WH-516) 1215-0145 
and Housing Terms and Conditions (WH-521) 1215-0146.
    (3) The Act also requires that farm labor contractors, agricultural 
employers and agricultural associations make, keep, preserve and 
disclose certain payroll records. Forms WH-501 and WH-501a (Spanish 
version) are provided to assist in carrying out this requirement. In 
addition, farm labor contractors who are applying for housing 
authorization must submit information which identifies the housing to be 
used along with proof of compliance with housing safety and health 
requirements. There has been no form developed for this purpose. The Act 
further requires disclosure by the insurance industry of certain 
information pertaining to cancellation of vehicle liability insurance 
policies. The requirements concerning recordkeeping, housing and 
insurance have been cleared by OMB under control number 1215-0148.
    (4) The Act provides that no farm labor contractor shall knowingly 
employ or utilize the services of aliens not lawfully admitted for 
permanent residence or who have not been authorized by the Attorney 
General to accept employment. Form WH-509 is an optional form which may 
be used to self-certify that the applicant is a citizen of the U.S. This 
form has been cleared by

[[Page 13]]

OMB under control number 1215-0091. (See Sec. 500.59(a)(11)).

[48 FR 36741, Aug. 12, 1983; 48 FR 38380, Aug. 23, 1983]



Sec. 500.2  Compliance with State laws and regulations.

    The Act and these regulations are intended to supplement State law; 
compliance with the Act or these regulations shall not excuse any

individual from compliance with appropriate State law or regulation.



Sec. 500.3  Effective date of the Act; transition period; repeal of the 
Farm Labor Contractor Registration Act.

    (a) The provisions of the Migrant and Seasonal Agricultural Worker 
Protection Act are effective on April 14, 1983, and are codified in 29 
U.S.C. 1801 et seq.
    (b) The Migrant and Seasonal Agricultural Worker Protection Act 
repeals the Farm Labor Contractor Registration Act of 1963, as amended, 
(7 U.S.C. 2041, et seq.), effective April 14, 1983.
    (c) Violations of the Farm Labor Contractor Registration Act 
occurring prior to April 14, 1983, may be pursued by the Department of 
Labor after that date.



Sec. 500.4  Effect of prior judgments and final orders obtained under 
the Farm Labor Contractor Registration Act.

    The Secretary may refuse to issue or to renew, or may suspend or 
revoke, a Certificate of Registration under the Act, if the applicant or 
holder has failed to pay any court judgment obtained by the Secretary or 
any other person under the Farm Labor Contractor Registration Act, or 
has failed to comply with any final order issued by the Secretary under 
the Farm Labor Contractor Registration Act. The Secretary may deny a 
Certificate of Registration under the Act to any farm labor contractor 
who has a judgment outstanding against him, or is subject to a final 
order assessing a civil money penalty which has not been paid.



Sec. 500.5  Filing of applications, notices and documents.

    Unless otherwise prescribed herein, all applications, notices and 
other documents required or permitted to be filed by these regulations 
shall be filed in accordance with the provisions of subpart F of the 
regulations.



Sec. 500.6  Accuracy of information, statements and data.

    Information, statements and data submitted in compliance with 
provisions of the Act or these regulations are subject to title 18, 
section 1001, of the United States Code, which provides:

             Section 1001.  Statements or entries generally.

    Whoever, in any matter within the jurisdiction of any department or 
agency of the United States knowingly and willfully falsifies, conceals 
or covers up by any trick, scheme, or device a material fact, or makes 
any false, fictitious or fraudulent statements or representations, or 
makes or uses any false writing or document knowing the same to contain 
any false, fictitious or fraudulent statement or entry, shall be fined 
not more than $10,000 or imprisoned not more than five years, or both.



Sec. 500.7  Investigation authority of the Secretary.

    (a) The Secretary, either pursuant to a complaint or otherwise, 
shall, as may be appropriate, investigate and, in connection therewith, 
enter and inspect such places (including housing and vehicles) and such 
records (and make transcriptions thereof), question such persons and 
gather such information as he deems necessary to determine compliance 
with the Act, or these regulations.
    (b) The Secretary may issue subpenas requiring the attendance and 
testimony of witnesses or the production of any evidence in connection 
with such investigations. The Secretary may administer oaths, examine 
witnesses, and receive evidence. For the purpose of any hearing or 
investigation provided for in the Act, the Authority contained in 
sections 9 and 10 of the Federal Trade Commission Act (15 U.S.C. 49, 
50), relating to the attendance of witnesses and the production of 
books, papers, and documents, shall be available to the Secretary. The 
Secretary shall conduct investigations in a manner which protects the 
confidentiality of any complainant or other party who provides 
information to the Secretary in good faith.

[[Page 14]]

    (c) Any person may report a violation of the Act or these 
regulations to the Secretary by advising any local office of the 
Employment Service of the various States, or any office of the Wage and 
Hour Division, Employment Standards Administration, U.S. Department of 
Labor, or any other authorized representative of the Administrator. The 
office or person receiving such a report shall refer it to the 
appropriate office of the Wage and Hour Division, Employment Standards 
Administration for the region or area in which the reported violation is 
alleged to have occurred.
    (d) In case of disobedience to a subpena, the Secretary may invoke 
the aid of a United States District Court which is authorized to issue 
an order requiring the person to obey such subpena.



Sec. 500.8  Prohibition on interference with Department of Labor officials.

    It is a violation of section 512(c) of the Act for any person to 
unlawfully resist, oppose, impede, intimidate, or interfere with any 
official of the Department of Labor assigned to perform an 
investigation, inspection, or law enforcement function pursuant to the 
Act during the performance of such

duties. (Other Federal statutes which prohibit persons from interfering 
with a Federal officer in the course of official duties are found at 18 
U.S.C. 111 and 18 U.S.C. 1114.)



Sec. 500.9  Discrimination prohibited.

    (a) It is a violation of the Act for any person to intimidate, 
threaten, restrain, coerce, blacklist, discharge, or in any manner 
discriminate against any migrant or seasonal agricultural worker because 
such worker has, with just cause:
    (1) Filed a complaint with reference to the Act with the Secretary 
of Labor; or
    (2) Instituted or caused to be instituted any proceeding under or 
related to the Act; or
    (3) Testified or is about to testify in any proceeding under or 
related to the Act; or
    (4) Exercised or asserted on behalf of himself or others any right 
or protection afforded by the Act.
    (b) A migrant or seasonal agricultural worker who believes, with 
just cause, that he has been discriminated against by any person in 
violation of this section may, no later than 180 days after such 
violation occurs, file a complaint with the Secretary alleging such 
discrimination.



Sec. 500.10  Waiver of rights prohibited.

    Any agreement by an employee purporting to waive or modify any 
rights inuring to said person under the Act or these regulations shall 
be void as contrary to public policy, except that a waiver or 
modification of rights or obligations hereunder in favor of the 
Secretary shall be valid for purposes of enforcement of the provisions 
of the Act or these regulations. This does not prevent agreements to 
settle private litigation.



Sec. 500.20  Definitions.

    For purposes of this part:
    (a) Administrator means the Administrator of the Wage and Hour 
Division, Employment Standards Administration, United States Department 
of Labor, and such authorized representatives as may be designated by 
the Administrator to perform any of the functions of the Administrator 
under this part.
    (b) Administrative Law Judge means a person appointed as provided in 
title 5 U.S.C. and qualified to preside at hearings under 5 U.S.C. 557. 
Chief Administrative Law Judge means the Chief Administrative Law Judge, 
United States Department of Labor, 800 K Street, NW., Suite 400, 
Washington, DC 20001-8002.
    (c) Agricultural association means any nonprofit or cooperative 
association of farmers, growers, or ranchers, incorporated or qualified 
under applicable State law, which recruits, solicits, hires, employs, 
furnishes, or transports any migrant or seasonal agricultural worker.
    (d) Agricultural employer means any person who owns or operates a 
farm, ranch, processing establishment, cannery, gin, packing shed or 
nursery, or who produces or conditions seed, and who either recruits, 
solicits, hires, employs, furnishes, or transports any migrant or 
seasonal agricultural worker.

[[Page 15]]

Produces seed means the planting, cultivation, growing and harvesting of 
seeds of agricultural or horticultural commodities. Conditions seed 
means the in-plant work done after seed production including the drying 
and aerating of seed.
    (e) Agricultural employment means employment in any service or 
activity included within the provisions of section 3(f) of the Fair 
Labor Standards Act of 1938 (29 U.S.C. 203(f)), or section 3121(g) of 
the Internal Revenue Code of 1954 (26 U.S.C. 3121(g)) and the handling, 
planting, drying, packing, packaging, processing, freezing, or grading 
prior to delivery for storage of any agricultural or horticultural 
commodity in its unmanufactured state.
    (f) Convicted means that a final judgment of guilty has been 
rendered by a court of competent jurisdiction from which no opportunity 
for appeal remains.
    (g) Day-haul operation means the assembly of workers at a pick-up 
point waiting to be hired and employed, transportation of such workers 
to agricultural employment, and the return of such workers to a drop-off 
point on the same day. This term does not include transportation 
provided by an employer for individuals who are already employees at the 
time they are picked up nor does it include carpooling arrangements by 
such employees which are not specifically directed or requested by the 
employer, farm labor contractor or agent thereof.
    (h)(1) The term employ has the meaning given such term under section 
3(g) of the Fair Labor Standards Act of 1938 (29 U.S.C. 203(g)) for the 
purposes of implementing the requirements of that Act. As so defined, 
employ includes to suffer or permit to work.
    (2) The term employer is given its meaning as found in the Fair 
Labor Standards Act. Employer under section 3(d) of that Act includes 
any person acting directly or indirectly in the interest of an employer 
in relation to an employee.
    (3) The term employee is also given its meaning as found in the Fair 
Labor Standards Act. Employee under section 3(e) of that Act means any 
individual employed by an employer.
    (4) The definition of the term employ may include consideration of 
whether or not an independent contractor or employment relationship 
exists under the Fair Labor Standards Act. Under MSPA, questions will 
arise whether or not a farm labor contractor engaged by an agricultural 
employer/association is a bona fide independent contractor or an 
employee. Questions also arise whether or not the worker is a bona fide 
independent contractor or an employee of the farm labor contractor and/
or the agricultural employer/association. These questions should be 
resolved in accordance with the factors set out below and the principles 
articulated by the federal courts in Rutherford Food Corp. v. McComb, 
331 U.S. 722 (1947), Real v. Driscoll Strawberry Associates, Inc., 603 
F.2d 748 (9th Cir. 1979), Sec'y of Labor, U.S. Dept. of Labor v. 
Lauritzen, 835 F.2d 1529 (7th Cir. 1987), cert. denied, 488 U.S. 898 
(1988); Beliz v. McLeod, 765 F.2d 1317 (5th Cir. 1985), and Castillo v. 
Givens, 704 F.2d 181 (5th Cir.), cert. denied, 464 U.S. 850 (1983). If 
it is determined that the farm labor contractor is an employee of the 
agricultural employer/association, the agricultural workers in the farm 
labor contractor's crew who perform work for the agricultural employer/
association are deemed to be employees of the agricultural employer/
association and an inquiry into joint employment is not necessary or 
appropriate. In determining if the farm labor contractor or worker is an 
employee or an independent contractor, the ultimate question is the 
economic reality of the relationship--whether there is economic 
dependence upon the agricultural employer/association or farm labor 
contractor, as appropriate. Lauritzen at 1538; Beliz at 1329; Castillo 
at 192; Real at 756. This determination is based upon an evaluation of 
all of the circumstances, including the following:
    (i) The nature and degree of the putative employer's control as to 
the manner in which the work is performed;
    (ii) The putative employee's opportunity for profit or loss 
depending upon his/her managerial skill;

[[Page 16]]

    (iii) The putative employee's investment in equipment or materials 
required for the task, or the putative employee's employment of other 
workers;
    (iv) Whether the services rendered by the putative employee require 
special skill;
    (v) The degree of permanency and duration of the working 
relationship;
    (vi) The extent to which the services rendered by the putative 
employee are an integral part of the putative employer's business.
    (5) The definition of the term employ includes the joint employment 
principles applicable under the Fair Labor Standards Act. The term joint 
employment means a condition in which a single individual stands in the 
relation of an employee to two or more persons at the same time. A 
determination of whether the employment is to be considered joint 
employment depends upon all the facts in the particular case. If the 
facts establish that two or more persons are completely disassociated 
with respect to the employment of a particular employee, a joint 
employment situation does not exist. When the putative employers share 
responsibility for activities set out in the following factors or in 
other relevant facts, this is an indication that the putative employers 
are not completely disassociated with respect to the employment and that 
the agricultural worker may be economically dependent on both persons:
    (i) If it is determined that a farm labor contractor is an 
independent contractor, it still must be determined whether or not the 
employees of the farm labor contractor are also jointly employed by the 
agricultural employer/association. Joint employment under the Fair Labor 
Standards Act is joint employment under the MSPA. Such joint employment 
relationships, which are common in agriculture, have been addressed both 
in the legislative history and by the courts.
    (ii) The legislative history of the Act (H. Rep. No. 97-885, 97th 
Cong., 2d Sess., 1982) states that the legislative purpose in enacting 
MSPA was ``to reverse the historical pattern of abuse and exploitation 
of migrant and seasonal farm workers * * *,'' which would only be 
accomplished by ``advanc[ing] * * * a completely new approach'' (Rept. 
at 3). Congress's incorporation of the FLSA term employ was undertaken 
with the deliberate intent of adopting the FLSA joint employer doctrine 
as the ``central foundation'' of MSPA and ``the best means by which to 
insure that the purposes of this MSPA would be fulfilled'' (Rept. at 6). 
Further, Congress intended that the joint employer test under MSPA be 
the formulation as set forth in Hodgson v. Griffin & Brand of McAllen, 
Inc. 471 F.2d 235 (5th Cir.), cert. denied, 414 U.S. 819 (1973) (Rept. 
at 7). In endorsing Griffin & Brand, Congress stated that this 
formulation should be controlling in situations ``where an agricultural 
employer * * * asserts that the agricultural workers in question are the 
sole employees of an independent contractor/crewleader,'' and that the 
``decision makes clear that even if a farm labor contractor is found to 
be a bona fide independent contractor, * * * this status does not as a 
matter of law negate the possibility that an agricultural employer may 
be a joint employer * * * of the harvest workers'' together with the 
farm labor contractor. Further, regarding the joint employer doctrine 
and the Griffin & Brand formulation, Congress stated that ``the absence 
of evidence on any of the criteria listed does not preclude a finding 
that an agricultural association or agricultural employer was a joint 
employer along with the crewleader'', and that ``it is expected that the 
special aspects of agricultural employment be kept in mind'' when 
applying the tests and criteria set forth in the case law and 
legislative history (Rept. at 8).
    (iii) In determining whether or not an employment relationship 
exists between the agricultural employer/association and the 
agricultural worker, the ultimate question to be determined is the 
economic reality--whether the worker is so economically dependent upon 
the agricultural employer/association as to be considered its employee.
    (iv) The factors set forth in paragraphs (h)(5)(iv)(A) through (G) 
of this section are analytical tools to be used in determining the 
ultimate question of economic dependency. The consideration of each 
factor, as well as the determination of the ultimate question of

[[Page 17]]

economic dependency, is a qualitative rather than quantitative analysis. 
The factors are not to be applied as a checklist. No one factor will be 
dispositive of the ultimate question; nor must a majority or particular 
combination of factors be found for an employment relationship to exist. 
The analysis as to the existence of an employment relationship is not a 
strict liability or per se determination under which any agricultural 
employer/association would be found to be an employer merely by 
retaining or benefiting from the services of a farm labor contractor. 
The factors set forth in paragraphs (h)(5)(iv)(A) through (G) of this 
section are illustrative only and are not intended to be exhaustive; 
other factors may be significant and, if so, should be considered, 
depending upon the specific circumstances of the relationship among the 
parties. How the factors are weighed depends upon all of the facts and 
circumstances. Among the factors to be considered in determining whether 
or not an employment relationship exists are:
    (A) Whether the agricultural employer/association has the power, 
either alone or through control of the farm labor contractor to direct, 
control, or supervise the worker(s) or the work performed (such control 
may be either direct or indirect, taking into account the nature of the 
work performed and a reasonable degree of contract performance oversight 
and coordination with third parties);
    (B) Whether the agricultural employer/association has the power, 
either alone or in addition to another employer, directly or indirectly, 
to hire or fire, modify the employment conditions, or determine the pay 
rates or the methods of wage payment for the worker(s);
    (C) The degree of permanency and duration of the relationship of the 
parties, in the context of the agricultural activity at issue;
    (D) The extent to which the services rendered by the worker(s) are 
repetitive, rote tasks requiring skills which are acquired with 
relatively little training;
    (E) Whether the activities performed by the worker(s) are an 
integral part of the overall business operation of the agricultural 
employer/association;
    (F) Whether the work is performed on the agricultural employer/
association's premises, rather than on premises owned or controlled by 
another business entity; and
    (G) Whether the agricultural employer/association undertakes 
responsibilities in relation to the worker(s) which are commonly 
performed by employers, such as preparing and/or making payroll records, 
preparing and/or issuing pay checks, paying FICA taxes, providing 
workers' compensation insurance, providing field sanitation facilities, 
housing or transportation, or providing tools and equipment or materials 
required for the job (taking into account the amount of the investment).
    (i) Farm labor contracting activity means recruiting, soliciting, 
hiring, employing, furnishing, or transporting any migrant or seasonal 
agricultural worker.
    (j) Farm labor contractor means any person--other than an 
agricultural employer, an agricultural association, or an employee of an 
agricultural employer or agricultural association--who, for any money or 
other valuable consideration paid or promised to be paid, performs any 
farm labor contracting activity.
    (k) Farm Labor Contractor Certificate of Registration or Certificate 
of Registration means the certificate issued by the Administrator which 
permits a farm labor contractor to engage in farm labor contracting 
activities.
    (l) Farm labor contractor employee who is required to obtain a 
Certificate of Registration as an employee of a farm labor contractor 
means a person who performs farm labor contracting activity solely on 
behalf of a farm labor contractor holding a valid Certificate of 
Registration and is not an independent farm labor contractor who would 
be required to register under the Act in his own right.
    (m) Farm Labor Contractor Employee Certificate or Farm Labor 
Contractor Employee Certificate of Registration or Employee Certificate 
means the certificate issued by the Administrator to an employee of a 
farm labor contractor authorizing the performance of farm

[[Page 18]]

labor contracting activities solely on behalf of such farm labor 
contractor and not as an independent farm labor contractor who would be 
required to register in his own right.
    (n) Illegal alien means any person who is not lawfully admitted for 
permanent residence in the United States or who has not been authorized 
by the Attorney General to accept employment in the United States.
    (o) Immediate family includes only:
    (1) A spouse;
    (2) Children, stepchildren, and foster children;
    (3) Parents, stepparents, and foster parents; and
    (4) Brothers and sisters.
    (p) Migrant agricultural worker means an individual who is employed 
in agricultural employment of a seasonal or other temporary nature, and 
who is required to be absent overnight from his permanent place of 
residence.
    (1) Migrant agricultural worker does not include:
    (i) Any immediate family member of an agricultural employer or a 
farm labor contractor; or
    (ii) Any temporary nonimmigrant alien who is authorized to work in 
agricultural employment in the United States under sections 
101(a)(15)(H)(ii)(a) and 214(c) of the Immigration and Nationality Act.
    (2) Permanent place of residence, with respect to an individual, 
means a domicile or permanent home. Permanent place of residence does 
not include seasonal or temporary housing such as a labor camp. The term 
permanent place of residence for any nonimmigrant alien is that 
individual's country of origin.
    (q) Person means any individual, partnership, association, joint 
stock company, trust, cooperative, or corporation.
    (r) Seasonal agricultural worker means an individual who is employed 
in agricultural employment of a seasonal or other temporary nature and 
is not required to be absent overnight from his permanent place of 
residence:
    (1) When employed on a farm or ranch performing field work related 
to planting, cultivating, or harvesting operations; or
    (2) When employed in canning, packing, ginning, seed conditioning or 
related research, or processing operations, and transported, or caused 
to be transported, to or from the place of employment by means of a day-
haul operation.
    (i) Seasonal agricultural worker does not include:
    (A) Any migrant agricultural worker;
    (B) Any immediate family member of an agricultural employer or a 
farm labor contractor; or
    (C) Any temporary nonimmigrant alien who is authorized to work in 
agricultural employment in the United States under sections 
101(a)(15)(H)(ii)(a) and 214(c) of the Immigration and Nationality Act.
    (ii) Field work related to planting, cultivating or harvesting 
operations includes all farming operations on a farm or ranch which are 
normally required to plant, harvest or produce agricultural or 
horticultural commodities, including the production of a commodity which 
normally occurs in the fields of a farm or ranch as opposed to those 
activities which generally occur in a processing plant or packing shed. 
A worker engaged in the placing of commodities in a container in the 
field and on-field loading of trucks and similar transports is included. 
Nursery, mushroom and similar workers engaged in activities in 
connection with planting, cultivating or harvesting operations are 
intended to be covered. An individual operating a machine, such as a 
picker, or tractor is not included when performing such activity.
    (s) On a seasonal or other temporary basis means:
    (1) Labor is performed on a seasonal basis where, ordinarily, the 
employment pertains to or is of the kind exclusively performed at 
certain seasons or periods of the year and which, from its nature, may 
not be continuous or carried on throughout the year. A worker who moves 
from one seasonal activity to another, while employed in agriculture or 
performing agricultural labor, is employed on a seasonal basis even 
though he may continue to be employed during a major portion of the 
year.
    (2) A worker is employed on other temporary basis where he is 
employed for a limited time only or his performance is contemplated for 
a particular

[[Page 19]]

piece of work, usually of short duration. Generally, employment, which 
is contemplated to continue indefinitely, is not temporary.
    (3) On a seasonal or other temporary basis does not include the 
employment of any foreman or other supervisory employee who is employed 
by a specific agricultural employer or agricultural association 
essentially on a year round basis.
    (4) On a seasonal or other temporary basis does not include the 
employment of any worker who is living at his permanent place of 
residence, when that worker is employed by a specific agricultural 
employer or agricultural association on essentially a year round basis 
to perform a variety of tasks for his employer and is not primarily 
employed to do field work.
    (t) Secretary means the Secretary of Labor or the Secretary's 
authorized representative.
    (u)(1) Solicitor of Labor means the Solicitor, United States 
Department of Labor, and includes attorneys designated by the Solicitor 
to perform functions of the Solicitor under these regulations.
    (2) Associate Solicitor for Fair Labor Standards means the Associate 
Solicitor, who, among other duties, is in charge of litigation for the 
Migrant and Seasonal Agricultural Worker Protection Act (MSPA), Office 
of the Solicitor, U.S. Department of Labor, Washington, DC 20210.
    (3) Regional Solicitors means the attorneys in charge of the various 
regional offices of the Office of the Solicitor.
    (v) State means any of the States of the United States, the District 
of Columbia, the Virgin Islands, the Commonwealth of Puerto Rico, and 
Guam. State agency means a State agency vested with all powers necessary 
to cooperate with the U.S.

Department of Labor for purposes of entering into agreements to carry 
out the Act as provided in section 513 thereof.
    (w) Temporary nonimmigrant alien means a person who has a residence 
in a foreign country which he does not intend to abandon and who comes 
temporarily to the United States, with approval of the Attorney General, 
to perform temporary service or labor.
    (x) The Wagner-Peyser Act is the Act of June 6, 1933 (48 Stat. 113; 
codified in 29 U.S.C. 49 et seq.), providing, inter alia, for the 
establishment of the U.S. Employment Service. Employment Service of the 
various States means a State agency vested with all powers necessary to 
cooperate with the U.S. Employment Service under the Wagner-Peyser Act.
    (y) The Immigration and Nationality Act (INA) as amended by the 
Immigration Reform and Control Act of 1986 (IRCA) to effectively control 
unauthorized immigration to the United States and for other purposes, is 
set out in 8 U.S.C. 1101 et seq.

[48 FR 36741, Aug. 12, 1983; 48 FR 38374, Aug. 23, 1983, as amended at 
54 FR 13329, Mar. 31, 1989; 56 FR 54708, Oct. 22, 1991; 62 FR 11747, 
Mar. 12, 1997]

                  Applicability of the Act: Exemptions



Sec. 500.30  Persons not subject to the Act.

    (a) Family business exemption. Any individual who engages in a farm 
labor contracting activity on behalf of a farm, processing 
establishment, seed conditioning establishment, cannery, gin, packing 
shed, or nursery, which is owned or operated exclusively by such 
individual or an immediate family member of such individual, if such 
activities are performed only for such operation and exclusively by such 
individual or an immediate family member, but without regard to whether 
such individual has incorporated or otherwise organized for business 
purposes.
    (b) Small business exemption. Any person, other than a farm labor 
contractor, for whom the man-days exemption for agricultural labor 
provided under section 13(a)(6)(A) of the Fair Labor Standards Act of 
1938 (29 U.S.C. 213(a)(6)(A)) is applicable. That exemption applies to 
an agricultural employer who did not, during any calendar quarter of the 
preceding calendar year, use more man-days of agricultural labor than 
the limit specified under that statute.
    (1) Currently the limit for exemption is 500 man-days.

[[Page 20]]

    (2) A man-day means any day during which an employee performs 
agricultural labor for not less than one (1) hour. Agricultural labor 
performed by an employer's parent, spouse, child, or other member of his 
immediate family, i.e., step-children, foster children, step-parents and 
foster parents, brothers, and sisters is not counted as man-days.
    (3) The man-days of agricultural labor rendered in a joint 
employment relationship are counted toward the man-days of such labor of 
each employer for purposes of the man-day test of this exemption.
    (c) Common carriers. Any common carrier which would be a farm labor 
contractor solely because the carrier is engaged in the farm labor 
contracting activity of transporting any migrant or seasonal 
agricultural worker. A ``common carrier'' by motor vehicle is one which 
holds itself out to the general public to engage in transportation of 
passengers for hire, whether over regular or irregular routes, and which 
holds a valid certificate of authorization for such purposes from an 
appropriate local, State or Federal agency.
    (d) Labor organizations. Any labor organization, as defined in 
section 2(5) of the Labor Management Relations Act (29 U.S.C. 152(5)) 
(without regard to the exclusion of agricultural employees in that Act) 
or as defined under applicable State labor relations law.
    (e) Nonprofit charitable organizations. Any nonprofit charitable 
organization or public or private nonprofit educational institution.
    (f) Local short-term contracting activity. Any person who engages in 
any farm labor contracting activity solely within a twenty-five mile 
intrastate radius of such person's permanent place of residence and for 
not more than thirteen weeks per year.
    (1) Twenty-five mile intrastate radius as used in section 4(a)(3)(D) 
of the Act means that engagement in a farm labor contracting activity 
may not go beyond a twenty-five mile intrastate geographical radius. 
Once this limit is transcended, the exemption no longer applies and the 
person becomes subject to the requirements of the Act. If, for example, 
a person or his employee solicits workers from a distance greater than 
twenty-five miles from his permanent residence or from across a State 
line, then the person has engaged in a named activity outside of the 
permitted scope of the exemption, and is subject to the requirements of 
the Act. A person who uses lines of communication (such as U.S. Mail, 
telephone, or advertising) to recruit, solicit, hire, or furnish workers 
over a distance greater than twenty-five miles from his permanent 
residence or from across a State line for agricultural employment is 
also engaged in a named activity beyond the specified limit of the 
exemption and is subject to the Act. In the case of a corporation its 
permanent place of residence for these purposes shall be a single 
designated location.
    (2) For not more than thirteen weeks per year as used in section 
4(a)(3)(D) of the Act means that farm labor contracting activities may 
not be engaged in for more than thirteen weeks in a year. This does not 
mean, however,

that persons who engage in intrastate and short-range farm labor 
contracting activities are exempt for the first thirteen weeks of their 
farm labor contracting activities each year. The number of weeks of 
contracting activity during the prior year is also a factor. When the 
limit of weeks for the exemption is exceeded in a calendar year, the 
person is subject immediately to the Act and is also presumed subject to 
the Act in the next calendar year, unless it can be shown that the tests 
of section 4(a)(3)(D) are met.
    (g) Custom combine. Any custom combine, hay harvesting, or sheep 
shearing operation. Custom combine, hay harvesting, and sheep shearing 
operation means the agricultural services and activities involved in 
combining grain, harvesting hay and shearing sheep which are provided to 
a farmer on a contract basis by a person who provides the necessary 
equipment and labor and who specializes on providing such services and 
activities.
    (h) Custom poultry operations. Any custom poultry harvesting, 
breeding, debeaking, desexing, or health service operation, provided the 
employees of the operation are not regularly required to be away from 
their permanent place of residence other than during their normal 
working hours.

[[Page 21]]

    (i) Seed production exemption. (1) Any person whose principal 
occupation or business is not agricultural employment, when supplying 
full-time students or other individuals whose principal occupation is 
not agricultural employment to detassel, rogue, or otherwise engage in 
the production of seed and to engage in related and incidental 
agricultural employment, unless such full-time students or other 
individuals are required to be away from their permanent place of 
residence overnight or there are individuals under eighteen years of age 
who are providing transportation on behalf of such person.
    (2) Any person to the extent he is supplied with students or other 
individuals for agricultural employment in accordance with paragraph 
(i)(1) of this section by a person who is exempt thereunder.
    (j) Shade grown tobacco. (1) Any person whose principal occupation 
or business is not agricultural employment, when supplying full-time 
students or other individuals whose principal occupation is not 
agricultural employment to string or harvest shade grown tobacco and to 
engage in related and incidental agricultural employment, unless there 
are individuals under eighteen years of age who are providing 
transportation on behalf of such person.
    (2) Any person to the extent he is supplied with students or other 
individuals for agricultural employment is accordance with paragraph 
(j)(1) of this section by a person who is exempt thereunder.
    (k) Employees of exempt employers. Any employee of any person 
described in paragraphs (c) through (j) of this section when performing 
farm labor contracting activities within the scope of such exemptions 
and exclusively for such person.



Subpart B--Registration of Farm Labor Contractors and Employees of Farm 
     Labor Contractors Engaged in Farm Labor Contracting Activities

                   Registration Requirements; General



Sec. 500.40  Registration in general.

    Any person who desires to engage in any activity as a farm labor 
contractor, as defined in the Act and these regulations, and is not 
exempt, is required first to obtain a Certificate of Registration 
authorizing each such activity. Any employee of a registered farm labor 
contractor who performs farm labor contracting activities solely on 
behalf of such contractor, and who is not an independent contractor, 
must obtain a Farm Labor Contractor Employee Certificate of Registration 
authorizing each such activity. The employee's certificate must show the 
name of the farm labor contractor for whom the activities are to be 
performed. The contractor whose name appears on the employee's 
certificate must hold a valid Certificate of Registration covering the 
entire period shown on the employee's certificate.



Sec. 500.41  Farm labor contractor is responsible for actions of his farm 
labor contractor employee.

    (a) A farm labor contractor is responsible for assuring that every 
employee who is performing farm labor contracting activities on behalf 
of such contractor has obtained either a Farm Labor Contractor Employee 
Certificate of Registration or a Certificate of Registration as an 
independent farm labor contractor, as required by the Act and these 
regulations, prior to such employee's engagement in any activity 
enumerated in section 3(6) of the Act. A farm labor contractor who 
utilizes the services of another farm labor contractor who is not his 
employee must also comply with the provisions of Sec. 500.71. The farm 
labor contractor is responsible for any violations of the

[[Page 22]]

Act or these regulations committed by his employee, whether or not the 
employee has registered as required by the Act.
    (b) A Farm Labor Contractor Employee Certificate of Registration is 
valid only during the period in which the holder is an employee of the 
registered farm labor contractor named on the Farm Labor Contractor 
Employee Certificate. If prior to the expiration of the Employee 
Certificate, the holder, through a change in employment, should become 
an employee of a different registered farm labor contractor, a 
replacement Employee Certificate which names the new employer may be 
obtained by submitting to the regional office that issued the original 
employee certificate or to any regional office of the Wage and Hour 
Division, Employment Standards Administration, a written statement that 
includes the date of the change in employment status and the name, the 
permanent place of residence and certificate registration number of the 
new employer. Any such change should be reported immediately.



Sec. 500.42  Certificate of Registration to be carried and exhibited.

    Each registered farm labor contractor and registered farm labor 
contractor employee shall carry at all times while engaging in farm 
labor contracting activities, a Certificate of Registration or a Farm 
Labor Contractor Employee Certificate as appropriate and, upon request, 
shall exhibit that certificate to representatives of the U.S. Department 
of Labor and State Employment Service Agencies and to all persons with 
whom he intends to deal as a farm labor contractor or farm labor 
contractor employee.



Sec. 500.43  Effect of failure to produce certificate.

    The facilities and the services authorized by the Wagner-Peyser Act 
shall be denied to any farm labor contractor upon refusal or failure to 
produce, when asked, a Certificate of Registration. Services shall be 
provided upon presentation of a valid Certificate of Registration.

    Applications and Renewal of Farm Labor Contractor and Farm Labor 
                    Contractor Employee Certificates



Sec. 500.44  Form of application.

    An application for issuance or renewal of a Farm Labor Contractor 
Certificate of Registration or Farm Labor Contractor Employee 
Certificate shall be made on forms designated by the Secretary.



Sec. 500.45  Contents of application.

    The application shall set forth the information required thereon 
which shall include the following:
    (a) A declaration, subscribed and sworn to by the applicant, stating 
the applicant's permanent place of residence, the farm labor contracting 
activities for which the certificate is requested, and the address to 
which official documents should be mailed;
    (b) A statement identifying each vehicle to be used to transport any 
migrant or seasonal agricultural worker and, if the vehicle is or will 
be owned or controlled by the applicant, documentation showing that the 
applicant for a Farm Labor Contractor Certificate of Registration is in 
compliance with the requirements of section 401 of the Act with respect 
to each such vehicle;
    (c) A statement identifying each facility or real property to be 
used to house any migrant agricultural worker and, if the facility or 
real property is or will be owned or controlled by the applicant, 
documentation showing that the applicant for a Farm Labor Contractor 
Certificate of Registration is in compliance with section 203 of the Act 
with respect to each such facility or real property;
    (d) A set of fingerprints of the applicant on Form FD 258 as 
prescribed by the U.S. Department of Justice;
    (e) A declaration, subscribed and sworn to by the applicant, 
consenting to the designation by a court of the Secretary as an agent 
available to accept service of summons in any action against the 
applicant, if the applicant has left the jurisdiction in which the 
action is commenced or otherwise has become unavailable to accept 
service; and

[[Page 23]]

    (f) Such other relevant information as the Secretary may require.



Sec. 500.46  Filing an application.

    Registration under the Act is required whether or not licensing or 
registration is required under State law.



Sec. 500.47  Place for filing application.

    Application forms may be filed in any State Employment Service 
Office or in any office of the Wage and Hour Division, U.S. Department 
of Labor.

                          Action on Application



Sec. 500.48  Issuance of certificate.

    The Administrator or authorized representative shall:
    (a) Review each application received and determine whether such 
application is complete and properly executed;
    (b) When appropriate, notify the applicant in writing of any 
incompleteness or error in the application and return the application 
for correction and completion;
    (c) Determine, after appropriate investigation, whether the 
applicant has complied with the requirements of the Act and these 
regulations, and if appropriate, issue a Certificate of

Registration or a Farm Labor Contractor Employee Certificate of 
Registration authorizing the performance of one or more activities 
permitted under the Act;
    (d) Authorize the activity of transporting a migrant or seasonal 
agricultural worker, subject to the maximum number of workers authorized 
to be transported under the vehicle liability policy and as indicated on 
the face of the Certificate of Registration, only upon receipt of:
    (1) A statement in the manner prescribed by the Secretary 
identifying each vehicle to be used, or caused to be used, by the 
applicant for the transportation of any migrant or seasonal agricultural 
worker during the period for which registration is sought;
    (2) Written proof that every such vehicle which is under the 
applicant's ownership or control, is in compliance with the vehicle 
safety requirements of the Act and these regulations; and
    (3) Written proof that every such vehicle is in compliance with the 
insurance requirements of the Act and these regulations;
    (e) Authorize the activity of driving a vehicle to transport a 
migrant or seasonal agricultural worker only upon receipt of (1) A 
doctor's certificate on the prescribed form, with an initial application 
for a Certificate of Registration or a Farm Labor Contractor Employee 
Certificate, and, when applying for a renewal, a new completed doctor's 
certificate if the previous doctor's certificate is more than three 
years old; and (2) evidence of a valid and appropriate license, as 
provided by State law, to operate the vehicle; and
    (f) Authorize the activity of housing a migrant agricultural worker 
only upon receipt of (1) A statement identifying each facility or real 
property to be used for housing a migrant agricultural worker during the 
period for which registration is sought; and (2) if the facility or real 
property is or will be owned or controlled by the applicant, written 
proof that the facility or real property complies with the applicable 
Federal and State standards of health and safety. Such written proof may 
be either a certification issued by a State or local health authority or 
other appropriate agency, or a copy of a written request for the 
inspection of a facility or real property made to the appropriate State 
or local agency at least forty-five days prior to the date on which the 
facility or real property is to be occupied by migrant agricultural 
workers, dated and signed by the applicant or other person who owns or 
controls the facility or real property. If housing authorization is 
issued based on a written request for inspection and the housing 
facility or real property is subsequently inspected and does not meet 
the appropriate standards, the housing authorization is null and void. 
Should the required written proof for housing authorization be 
unavailable at the time of filing an application, the applicant must 
attest in writing that the applicant will not house any migrant 
agricultural worker in any facility or real property owned or controlled 
by the applicant, until such applicant shall have submitted all 
necessary written proof and obtained a Farm Labor Contractor Certificate 
of Registration showing that housing in

[[Page 24]]

the facility or real property is authorized by the Secretary of Labor. 
In such event, if otherwise eligible, the applicant will be issued a 
Certificate of Registration without a housing authorization. This 
certificate may be amended to include an authorization to house at such 
time as the required proof is forthcoming.

[48 FR 36741, Aug. 12, 1983, as amended at 61 FR 24865, May 16, 1996]



Sec. 500.50  Duration of certificate.

    (a) Initial certificates of farm labor contractors and farm labor 
contractor employees. (1) An initial certificate issued under the Act 
and these regulations shall expire twelve months from the date of 
issuance unless earlier suspended or revoked.
    (2) Certificates applied for during the period beginning April 14, 
1983, and ending November 30, 1983, may be issued for a period of up to 
twenty-four months for the purpose of an orderly transition to 
registration under the Act.
    (3) Certificates issued to employees of farm labor contractors shall 
expire at the suspension, revocation or expiration of the farm labor 
contractor's Certificate of Registration under which such employee was 
authorized.
    (b) Certificate renewal of farm labor contractors and farm labor 
contractor employees. (1) A certificate issued under the Act and these 
regulations may be temporarily extended by the filing of a properly 
completed and signed application with the Secretary at least thirty days 
prior to the expiration date. ``Filing'' may be accomplished by hand 
delivery, certified mail, or regular mail.
    (i) If the application for renewal is filed by regular mail or if it 
is delivered in person by the applicant, it must be received by the 
Department of Labor or an authorized representative of the Department of 
Labor at least 30 days prior to the expiration date shown on the current 
certificate.
    (ii) If the application for renewal is filed by certified mail, it 
must be mailed at least 30 days prior to the expiration date shown on 
the current certificate.

Where timely application for renewal has been filed, the authority to 
operate pursuant to a valid certificate under the Act and these 
regulations shall continue until the renewal application has been 
finally determined by the Secretary.
    (2) A certificate issued under the Act and these regulations may be 
renewed by the Secretary for additional twelve-month periods or for 
periods in excess of twelve months but not in excess of twenty-four 
months.
    (3) Eligibility for renewals of certificates for more than twelve 
months under the Act and these regulations shall be limited to those 
farm labor contractors and farm labor contractor employees who have not 
been cited during the preceding five years for a violation of the Act or 
any regulation under the Act, or the Farm Labor Contractor Registration 
Act or any regulation under such Act.
    (c) Continuation of certain FLCRA certificates. (1) Certificates 
issued under FLCRA, and in effect on April 14, 1983, that are valid for 
the services performed under FLCRA, will be continued in effect and be 
accepted as authorization to perform like services under the Act and 
these regulations for the remainder of calendar year 1983. Such 
certificates will be subject to the Act and these regulations with 
respect to determinations to suspend, revoke or refuse renewal.
    (2) Actions pending related to the suspension, revocation, or 
refusal to issue or renew FLCRA certificates shall continue through to a 
final determination. Any such certificate which is considered to be in 
effect under title 29 CFR 40.21 pending a final determination, will be 
considered valid under MSPA, provided application for a certificate 
under MSPA is made no later than November 30, 1983.

[48 FR 36741, Aug. 12, 1983, as amended at 54 FR 13329, Mar. 31, 1989]



Sec. 500.51  Refusal to issue or to renew, or suspension or revocation of 
certificate.

    The Secretary may suspend or revoke or refuse to issue or to renew a 
Certificate of Registration (including a Farm Labor Contractor Employee 
Certificate) if the applicant or holder:
    (a) Has knowingly made any misrepresentation in the application for 
such certificate;

[[Page 25]]

    (b) Is not the real party in interest in the application or 
Certificate of Registration and the real party in interest is a person 
who has been refused issuance or renewal of a certificate, has had a 
certificate suspended or revoked, or does not qualify under this section 
for a certificate;
    (c) Has failed to comply with the Act or these regulations;
    (d) Has failed to pay any court judgment obtained by the Secretary 
or any other person under the Act or these regulations or under the Farm 
Labor Contractor Registration Act of 1963 or any regulation under such 
Act;
    (e) Has failed to comply with any final order issued by the 
Secretary as a result of a violation of the Act or these regulations or 
a violation of the Farm Labor Contractor Registration Act of 1963 or any 
regulation under such Act;
    (f) Has been convicted within the preceding five years:
    (1) Of any crime under State or Federal law relating to gambling, or 
to the sale, distribution or possession of alcoholic beverages, in 
connection with or incident to any farm labor contracting activities, or
    (2) Of any felony under State or Federal law involving robbery, 
bribery, extortion, embezzlement, grand larceny, burglary, arson, 
violation of narcotics laws, murder, rape, assault with intent to kill, 
assault which inflicts grievous bodily injury, prostitution, peonage, or 
smuggling or harboring individuals who have entered the United States 
illegally.
    (g) Has been found to have violated paragraph (1) or (2) of section 
274A(a) of the Immigration and Nationality Act (INA) by hiring, 
recruiting, or referring for a fee, for employment in the United States, 
(1) An alien knowing the alien is an unauthorized alien as defined in 
section 274A(h)(3) of INA with respect to such employment, or (2) an 
individual without complying with the requirements concerning 
verification of the person's identity and employment authorization as 
stated in section 274A(b) of INA.

[48 FR 36741, Aug. 12, 1983, as amended at 54 FR 13329, Mar. 31, 1989]



Sec. 500.52  Right to hearing.

    Any applicant or holder who desires an administrative hearing on the 
determination to refuse to issue or to renew, or to suspend or to 
revoke, a Certificate of Registration or a Farm Labor Contractor 
Employee Certificate of Registration, shall make a request in accordance 
with Sec. 500.212, no later than thirty (30) days after service of the 
notice referred to in Sec. 500.210.



Sec. 500.53  Nontransfer of certificate.

    A Certificate of Registration may not be transferred or assigned.



Sec. 500.54  Change of address.

    During the period for which the Certificate of Registration or 
Employee Certificate is in effect, each farm labor contractor or farm 
labor contractor employee shall provide to the Secretary, within thirty 
(30) days, a notice of each change of permanent place of residence in 
accordance with Sec. 500.215.



Sec. 500.55  Changes to or amendments of certificate authority.

    (a) During the period for which the Certificate of Registration is 
in effect, a farm labor contractor must apply to the Secretary to amend 
the Certificate of Registration whenever he intends to:
    (1) Engage in another farm labor contracting activity;
    (2) Use, or cause to be used, another vehicle than that covered by 
the certificate to transport any migrant or seasonal agricultural 
worker; or
    (3) Use, or cause to be used, another real property or facility to 
house any migrant agricultural worker than that covered by the 
certificate.
    (b) Whenever another vehicle or housing facility or real property is 
or will be owned, operated, or controlled by the farm labor contractor, 
the farm labor contractor must submit the appropriate information to 
obtain transportation, driving or housing authorization, as applicable, 
as described in Sec. 500.48, within 10 days after the contractor obtains 
or learns of the intended use of such vehicle or housing facility or 
real property.
    (c) Notwithstanding submission of the appropriate information, the 
farm labor contractor must comply with all

[[Page 26]]


applicable motor safety, insurance, and housing safety and health 
provisions of the Act and these regulations. With regard to housing, the 
farm labor contractor must submit the appropriate housing documentation 
as well as comply with the housing safety and health provisions of the 
Act and these regulations, prior to occupancy by a migrant agricultural 
worker.



Sec. 500.56  Replacement of Certificate of Registration or Farm Labor 
Contractor Employee Certificate.

    If a Certificate of Registration or a Farm Labor Contractor Employee 
Certificate is lost or destroyed, a duplicate certificate may be 
obtained by the submission to the regional office that issued it or to 
any regional office of the Wage and Hour Division, Employment Standards 
Administration, of a written statement explaining its loss or 
destruction, indicating where the original application was filed and 
requesting that a duplicate be issued.

    Additional Obligations of Farm Labor Contractors and Farm Labor 
                          Contractor Employees



Sec. 500.60  Farm labor contractors' recruitment, contractual and general 
obligations.

    The Act imposes certain specific recruitment, contractual and 
general obligations on farm labor contractors and farm labor contractor 
employees. The contractor is responsible for any violations under the 
Act committed by his employee. Each of the following obligations applies 
to both farm labor contractors and farm labor contractor employees.
    (a) Each farm labor contractor shall provide to any other farm labor 
contractor and to any agricultural employer and agricultural association 
to which such farm labor contractor has furnished any migrant or 
seasonal agricultural worker, copies of all records for that place of 
employment which such farm labor contractor is required to retain for 
each worker furnished or supplied. The recipient of these records shall 
keep them for a period of three years.
    (b) Each farm labor contractor, without regard to any other 
provisions of this Act, shall obtain at each place of employment and 
make available for inspection to every worker he furnishes for 
employment, a written statement of the conditions of such employment as 
described in sections 201(b) and 301(b) of the Act and Secs. 500.75 and 
500.76 of these regulations. As with the written disclosure statements 
under Secs. 500.76 and 500.77, these statements must be provided to the 
workers in English or, as necessary and reasonable, in Spanish or 
another language common to migrant or seasonal agricultural workers who 
are not fluent in English.
    (c)(1) No farm labor contractor shall violate, without 
justification, the terms of any written agreements made with an 
agricultural employer or an agricultural association pertaining to any 
contracting activity or worker protection under the Act. Normally, 
``without justification'' would not include situations in which failure 
to comply with the terms of any written agreements was directly 
attributable to Acts of God, due to conditions beyond the control of the 
person or to conditions which he could not reasonably foresee.
    (2) Written agreements do not relieve a farm labor contractor of any 
responsibility that such contractor would otherwise have under the Act 
and these regulations.
    (d) All payroll records made by the farm labor contractor must be 
retained by him for a period of three years.



Sec. 500.61  Farm labor contractors must comply with all worker protections 
and all other statutory provisions.

    Every farm labor contractor must comply with all of the provisions 
of titles I through V of the Act and all of the subparts of these 
regulations, unless subject to a specific statutory exemption. In 
addition to complying with all of the standards stated in subparts A and 
B of these regulations, every farm labor contractor must comply with 
each provision stated in subpart C and the motor vehicle safety and 
insurance and housing standards stated in subpart D.

[[Page 27]]



Sec. 500.62  Obligations of a person holding a valid Farm Labor Contractor 
Employee Certificate of Registration.

    Any person holding a valid Farm Labor Contractor Employee 
Certificate of Registration in accordance with the Act and these 
regulations is required to comply with the Act and these regulations to 
the same extent as if said person had been required to obtain a 
Certificate of Registration in such person's own name as a farm labor 
contractor.



                      Subpart C--Worker Protections

                                 General



Sec. 500.70  Scope of worker protections.

    (a) General. The Act provides protections for migrant and seasonal 
agricultural workers irrespective of whether they are employed by a farm 
labor contractor, an agricultural employer or an agricultural 
association, or, in the case where there is joint responsibility, by 
more than one of these persons. The Act's provisions include standards 
relating to vehicle safety, housing safety and health, disclosure of 
wages, hours and other conditions of employment, and recordkeeping. When 
any person not otherwise exempt from the Act recruits, solicits, hires, 
employs, furnishes or transports workers, that person is required to 
comply with the applicable protective provisions of the Act. In 
addition, any person not specifically exempt from coverage of the Act 
(irrespective of whether that person is an agricultural employer, an 
agricultural association or farm labor contractor) who owns or controls 
a facility or real property which is used as housing for any migrant 
agricultural workers must ensure that the facility or real property 
complies with all substantive Federal and State safety and health 
standards made applicable to that type of housing. (See Sec. 500.132)
    (b) Wage related protections. Joint employment under the Fair Labor 
Standards Act, which establishes responsibility for the maintenance of 
payroll records, payment of wages and posting of notices under that law, 
is joint employment under MSPA for establishing responsibility for the 
maintenance of records, payment of wages and the posting of required 
posters under MSPA. In such joint employment situations the 
responsibility for assuring these MSPA protections may be carried out by 
one of the joint employers. While under a joint employment relationship 
all joint employers are equally responsible for assuring that the 
appropriate protections are provided, the creation of such a joint 
employment relationship does not also require unnecessary duplication of 
effort as, for example, in relation to the posting of posters (see 
Secs. 500.75(e) and 500.76(e)) or the provision of an itemized written 
statement of the worker's pay (see Sec. 500.80(d)). Failure to provide 
protections coming within the joint employment relationship, however, 
will result in all joint employers being responsible for that failure.
    (c) Transportation related protections. Responsibility for 
compliance with the motor vehicle safety and insurance provisions of 
section 401 of the Act and Secs. 500.100 through 500.128 of these 
regulations is imposed upon the person or persons using or causing to be 
used, any vehicle for transportation of migrant or seasonal agricultural 
workers. As stated in these regulations, the transportation safety 
provisions do not include certain car pooling arrangements. 
Additionally, these regulations do not impose responsibility on an 
agricultural employer or agricultural association for a farm labor 
contractor's failure to adhere to the safety provisions provided in 
these regulations when the farm labor contractor is providing the 
vehicles and directing their use. However, when an agricultural employer 
or agricultural association specifically directs or requests a farm 
labor contractor to use the contractor's vehicle to carry out a task for 
the agricultural employer or agricultural association, such direction 
constitutes causing the vehicle to be used and the agricultural employer 
or agricultural association is jointly responsible with the farm labor 
contractor for assuring that the vehicle meets the insurance, and safety 
and health provisions of these regulations. In all cases a person using 
a farm labor contractor is required to take reasonable steps to 
determine that the vehicle used by the

[[Page 28]]

farm labor contractor is authorized to be used for transportation as 
prescribed in section 402 of the Act and Sec. 500.71 of these 
regulations.
    (d) Housing related protections. Responsibility for compliance with 
the housing safety and health provisions of section 203 of the Act and 
Secs. 500.130 through 500.135 of these regulations is imposed upon the 
person (or persons) who owns or controls a facility or real property 
used as housing for migrant agricultural workers. Any agricultural 
employer or agricultural association which has a farm labor contractor 
operate housing which it owns or controls is responsible, as well as the 
farm labor contractor, for insuring compliance with the housing safety 
and health provisions of these regulations. When the owner or operator 
of the housing is not an agricultural employer, agricultural association 
or farm labor contractor, the owner is responsible for that housing 
meeting the safety and health provisions under the Act and these 
regulations. This is subject to the exclusion stated in Sec. 500.131 of 
these regulations which provides that the housing safety and health 
requirements do not apply to any person who, in the ordinary course of 
that person's business, regularly provides housing on a commercial basis 
to the general public and who provides housing to any migrant 
agricultural worker of the same character and on the same or comparable 
terms and conditions as provided to the general public.



Sec. 500.71  Utilization of only registered farm labor contractors.

    The Act prohibits any person from utilizing the services of a farm 
labor contractor to supply migrant or seasonal agricultural workers 
without first taking reasonable steps to determine that the farm labor 
contractor possesses a valid Certificate of Registration, issued 
pursuant to the Act, which authorizes the activity for which the 
contractor is to be utilized. This prohibition also applies to a farm 
labor contractor who wishes to utilize the services of another farm 
labor contractor (see Sec. 500.41). In making the determination about a 
contractor's registration status, a person may rely upon the 
contractor's possession of a Certificate of Registration which on its 
face is valid and which authorizes the activity for which the contractor 
is utilized. A person has the alternative to confirm the contractor's 
registration through the central registry maintained by the United 
States Department of Labor.



Sec. 500.72  Agreements with workers.

    (a) The Act prohibits farm labor contractors, agricultural employers 
and agricultural associations from violating, without justification, the 
terms of any working arrangements they have made with migrant or 
seasonal agricultural workers. Normally, ``without justification'' would 
not include situations in which failure to comply with the terms of any 
working arrangements was directly attributable to acts of God, due to 
conditions beyond the control of the person or to conditions which he 
could not reasonably foresee.
    (b) Written agreements do not relieve any person of any 
responsibility that the person would otherwise have under the Act or 
these regulations.



Sec. 500.73  Required purchase of goods or services solely from any person 
prohibited.

    The Act prohibits a farm labor contractor, agricultural employer or 
agricultural association from requiring a migrant or seasonal 
agricultural worker to purchase goods or services solely from such farm 
labor contractor, agricultural employer, or agricultural association, or 
any other person acting as an agent for any person subject to this 
prohibition.

  Recruiting, Hiring and Providing Information to Migrant Agricultural 
                                 Workers



Sec. 500.75  Disclosure of information.

    (a) Where disclosure is required, Department of Labor optional forms 
may be used to satisfy the requirements of disclosure under the Act.
    (b) Each farm labor contractor, agricultural employer, and 
agricultural association which recruits any migrant agricultural worker 
shall ascertain to the best of his ability and disclose, in

[[Page 29]]

writing to the extent that he has obtained such information, to such 
worker at the time of recruitment, the following information:
    (1) The place of employment (with as much specificity as practical, 
such as the name and address of the employer or the association);
    (2) The wage rates (including piece rates) to be paid;
    (3) The crops and kinds of activities on which the worker may be 
employed;
    (4) The period of employment;
    (5) The transportation, housing, and any other employee benefits to 
be provided, if any, and any costs to be charged for each of them;
    (6) Whether state workers' compensation or state unemployment 
insurance is provided:
    (i) If workers' compensation is provided, the required disclosure 
must include the name of the workers' compensation insurance carrier, 
the name(s) of the policyholder(s), the name and telephone number of 
each person who must be notified of an injury or death, and the time 
period within which such notice must be given.
    (ii) The information requirement in paragraph (b)(6)(i) of this 
section may be satisfied by giving the worker a photocopy of any 
workers' compensation notice required by State law;.
    (7) The existence of any strike or other concerted work stoppage, 
slowdown, or interruption of operations by employees at the place of 
employment; and
    (8) The existence of any arrangements with any owner or agent of any 
establishment in the area of employment under which the farm labor 
contractor, the agricultural employer, or the agricultural association 
is to receive a commission or any other benefit resulting from any sales 
by such establishment to the workers.
    (c) Each farm labor contractor, agricultural employer and 
agricultural association which employs any migrant agricultural worker 
shall post (and maintain) in a conspicuous place at the place of 
employment a poster provided by the Secretary of Labor, which sets out 
the rights and protections for workers required under the Act.
    (d) The employer (other than a farm labor contractor) of any migrant 
agricultural worker, shall provide at the place of employment on request 
of the worker, a written statement of the conditions of employment. A 
farm labor contractor shall provide such information in accordance with 
Sec. 500.60(b) of these regulations.
    (e) In a joint employment situation, each employer is equally 
responsible for displaying and maintaining the poster and for responding 
to worker requests for written statements of the conditions of 
employment which are made during the course of employment. This joint 
responsibility, however, does not require needless duplication, such as 
would occur if each employer posted the same poster or provided the same 
written statement with respect to the same employment conditions. 
Failure to provide the information required by a joint employment 
relationship, however, will result in all joint employers being 
responsible for that failure.
    (f) Each farm labor contractor, agricultural employer and 
agricultural association which provides housing for any migrant 
agricultural worker shall post in a conspicuous place (at the site of 
the housing) or present in the form of a written statement to the worker 
the following information on the terms and conditions of occupancy of 
such housing, if any:
    (1) The name and address of the farm labor contractor, agricultural 
employer

or agricultural association providing the housing;
    (2) The name and address of the individual in charge of the housing;
    (3) The mailing address and phone number where persons living in the 
housing facility may be reached;
    (4) Who may live at the housing facility;
    (5) The charges to be made for housing;
    (6) The meals to be provided and the charges to be made for them;
    (7) The charges for utilities; and
    (8) Any other charges or conditions of occupancy.
    (g) If the terms and conditions of occupancy are posted, the poster 
shall be displayed and maintained during the entire period of occupancy. 
If the terms

[[Page 30]]

and conditions of occupancy are disclosed to the worker through a 
statement (rather than through a posting), such statement shall be 
provided to the worker prior to occupancy. Department of Labor optional 
forms may be used to satisfy this requirement.

[48 FR 36741, Aug. 12, 1983, as amended at 61 FR 24866, May 16, 1996]

    Hiring and Providing Information to Seasonal Agricultural Workers



Sec. 500.76  Disclosure of information.

    (a) Where disclosure is required, Department of Labor optional forms 
may be used to satisfy the requirements of disclosure under the Act.
    (b) Each farm labor contractor, agricultural employer and 
agricultural association, which recruits any seasonal agricultural 
worker for employment on a farm or ranch to perform field work related 
to planting, cultivating or harvesting operations, shall ascertain and, 
upon request, disclose in writing the following information to such 
worker when an offer of employment is made:
    (1) The place of employment (with as much specificity as practical, 
such as the name and address of the employer or the association);
    (2) The wage rates (including piece rates) to be paid;
    (3) The crops and kinds of activities on which the worker may be 
employed;
    (4) The period of employment;
    (5) The transportation and any other employee benefits to be 
provided, if any, and any costs to be charged for each of them;
    (6) Whether state workers' compensation or state unemployment 
insurance is provided:
    (i) If workers' compensation is provided, the required disclosure 
must include the name of the workers' compensation insurance carrier, 
the name(s) of the policyholder(s), the name and telephone number of 
each person who must be notified of an injury or death, and the time 
period within which such notice must be given.
    (ii) The information requirement in paragraph (b)(6)(i) of this 
section may satisfied giving the worker a photocopy of any workers' 
compensation notice required by State law;
    (7) The existence of any strike or other concerted work stoppage, 
slowdown, or interruption of operations by employees at the place of 
employment; and
    (8) The existence of any arrangements with any owner or agent of any 
establishment in the area of employment under which the farm labor 
contractor, the agricultural employer, or the agricultural association 
is to receive a commission or any other benefit resulting from any sales 
by such establishment to the workers.
    (c) Each farm labor contractor, agricultural employer and 
agricultural association which recruits any seasonal agricultural worker 
for employment through the use of day-haul operation in canning, 
packing, ginning, seed conditioning or related research, or processing 
operations, shall ascertain and disclose in writing to the worker at the 
time of recruitment the information on employment conditions set out in 
paragraph (b) of this section.
    (d)(1) Each farm labor contractor, agricultural employer and 
agricultural association which employs any seasonal agricultural worker 
shall post (and maintain) at the place of employment in a conspicuous 
place readily accessible to the worker a poster provided by the 
Secretary of Labor which sets out the rights and protections for such 
worker required under the Act.
    (2) Such employer shall provide, on request of the worker, a written 
statement of the information described in paragraph (b) of this section.
    (e) In a joint employment situation, each employer is equally 
responsible for displaying and maintaining the poster and for responding 
to worker requests for written statements of the conditions of 
employment which are made during the course of employment. This joint 
responsibility, however, does not require needless duplication, such as 
would occur if each employer posted the same poster or provided the same 
written statement with respect to the same employment conditions.

[48 FR 36741, Aug. 12, 1983, as amended at 61 FR 24866, May 16, 1996]

[[Page 31]]

                    Employment Information Furnished



Sec. 500.77  Accuracy of information furnished.

    No farm labor contractor, agricultural employer or agricultural 
association shall knowingly provide false or misleading information on 
the terms, conditions or existence of agricultural employment and 
housing required to be disclosed by the Act and these regulations to any 
migrant or seasonal agricultural worker.



Sec. 500.78  Information in foreign language.

    Each farm labor contractor, agricultural employer and agricultural 
association shall make all required written disclosures to the worker, 
including the written disclosures of the terms and conditions of 
occupancy of housing to be provided to any migrant worker, in English 
or, as necessary and reasonable, in Spanish or another language common 
to migrant or seasonal agricultural workers who are not fluent or 
literate in English. The Department of Labor shall make forms available 
in English, Spanish, Haitian-Creole and other languages, as necessary, 
which may be used in providing workers with such information.

                       Wages and Payroll Standards



Sec. 500.80  Payroll records required.

    (a) Each farm labor contractor, agricultural employer and 
agricultural association which employs any migrant or seasonal 
agricultural worker shall make and keep the following records with 
respect to each worker including the name, permanent address, and Social 
Security number:
    (1) The basis on which wages, are paid;
    (2) The number of piecework units earned, if paid on a piecework 
basis;
    (3) The number of hours worked;
    (4) The total pay period earnings;
    (5) The specific sums withheld and the purpose of each sum withheld; 
and
    (6) The net pay.
    (b) Each farm labor contractor, agricultural employer and 
agricultural association which employs any migrant or seasonal 
agricultural worker shall preserve all payroll records with respect to 
each such worker for a period of three years.
    (c) When a farm labor contractor furnishes any migrant or seasonal 
agricultural worker, and the farm labor contractor is the employer, the 
farm labor contractor must furnish the agricultural employer, 
agricultural association or other farm labor contractor to whom the 
workers are furnished, a copy of all payroll records required under 
paragraph (a) of this section which the farm labor contractor has made 
regarding such worker for that place of employment. The person receiving 
such records shall maintain them for a period of three years.
    (d) In addition to making records of this payroll information, the 
farm labor contractor, agricultural employer and agricultural 
association shall provide each migrant or seasonal agricultural worker 
employed with an itemized written statement of this information at the 
time of payment for each pay period which must be no less often than 
every two weeks (or semi-monthly). Such statement shall also include the 
employer's name, address, and employer indentification number assigned 
by the Internal Revenue Service. This responsibility does not require 
needless duplication such as would occur if each provided the worker 
with a written itemized statement for the same work.



Sec. 500.81  Payment of wages when due.

    Each farm labor contractor, agricultural employer and agricultural 
association which employs any migrant or seasonal agricultural worker 
must pay the wages owed such worker when due. In meeting this 
responsibility, the farm labor contractor, agricultural employer and 
agricultural association shall pay the worker no less often than every 
two weeks (or semi-monthly).

[[Page 32]]



  Subpart D--Motor Vehicle Safety and Insurance for Transportation of 
Migrant and Seasonal Agricultural Workers, Housing Safety and Health for 
                             Migrant Workers

                          Motor Vehicle Safety



Sec. 500.100  Vehicle safety obligations.

    (a) General obligations. Each farm labor contractor, agricultural 
employer and agricultural association which uses, or causes to be used, 
any vehicle to transport a migrant or seasonal agricultural worker shall 
ensure that such vehicle conforms to vehicle safety standards prescribed 
by the Secretary of Labor under the Act and with other applicable 
Federal and State safety standards. Each farm labor contractor, 
agricultural employer and agricultural association shall also ensure 
that each driver of any such vehicle has a currently valid motor vehicle 
operator's permit or license, as provided by applicable State law, to 
operate the vehicle.
    (b) Proof of compliance with vehicle safety standards. Prima facie 
evidence that safety standards have been met will be shown by the 
presence of a current State vehicle inspection sticker. Such sticker 
will not, however, relieve the farm labor contractor, agricultural 
employer or agricultural association from responsibility for maintaining 
the vehicle in accordance with Sec. 500.104 or Sec. 500.105, as 
applicable.
    (c) Uses or causes to be used. The term ``uses or causes to be 
used'' as set forth in paragraph (a) of this section does not include 
carpooling arrangements made by the workers themselves, using one of the 
workers' own vehicles. However, carpooling does not include any 
transportation arrangement in which a farm labor contractor participates 
or which is specifically directed or requested by an agricultural 
employer or an agricultural association.



Sec. 500.101  Promulgation and adoption of vehicle standards.

    (a) General. All transportation of migrant and seasonal agricultural 
workers, whether on the farm or on the road, shall be subject to the 
vehicle safety standards of the Act, except for activities under the 
circumstances set out in Sec. 500.103.
    (b) Compliance required. Any violation of the standards promulgated 
by the Secretary in Sec. 500.104 or adopted by the Secretary in 
Sec. 500.105 shall be a violation of the Act and these regulations.
    (c) Development of Department of Labor Standards. In developing the 
regulations in Sec. 500.104, the Secretary has considered among other 
factors: (1) The type of vehicle used, (2) the passenger capacity of the 
vehicle, (3) the distance which such workers will be carried in the 
vehicle, (4) the type of roads and highways on which such workers will 
be carried in the vehicle, and (5) the extent to which a proposed 
standard would cause an undue burden on agricultural employers, 
agricultural associations, or farm labor contractors.
    (d) Adoption of Department of Transportation (DOT) Standards. In 
accordance with section 401(b)(2)(C) of the Act, the Secretary has 
adopted in Sec. 500.105 of these regulations, the DOT standards, without 
regard to the mileage and boundary limitations established in 49 U.S.C. 
3102(c).



Sec. 500.102  Applicability of vehicle safety standards.

    (a) Any passenger automobile or station wagon used or caused to be 
used by any farm labor contractor, agricultural employer or agricultural 
association to transport any migrant or seasonal agricultural worker 
shall meet the vehicle safety standards prescribed in Sec. 500.104.
    (b) Any vehicle, other than a passenger automobile or station wagon, 
used or caused to be used by any farm labor contractor, agricultural 
employer or agricultural association to transport any migrant or 
seasonal agricultural worker pursuant to a day-haul operation shall be 
subject to the safety standards prescribed under Sec. 500.105.
    (c) Any vehicle, other than a passenger automobile or station wagon, 
which has been or is being used or caused to be used for any trip of a 
distance greater than 75 miles by a farm labor contractor, agricultural 
employer or agricultural association to transport any migrant or 
seasonal agricultural worker, shall be subject to

[[Page 33]]

the safety standards prescribed under Sec. 500.105. One trip may have 
numerous intermediate stops.
    (d) Any vehicle, other than a passenger automobile or station wagon, 
used or caused to be used by any farm labor contractor, agricultural 
employer or agricultural association to transport any migrant or 
seasonal agricultural worker in any manner not addressed by paragraphs 
(a), (b), or (c) of this section shall meet the vehicle safety standards 
prescribed in Sec. 500.104.
    (e) The use or intended use of a vehicle, other than a passenger 
automobile or station wagon, for transportation of the type identified 
in Sec. 500.102(b) or Sec. 500.102(c) will make the vehicle subject to 
the standards prescribed under Sec. 500.105, so long as the vehicle is 
used for transportation subject to the Act and these regulations.
    (f) Any pickup truck used only for transportation subject to 
Sec. 500.104 when transporting passengers only within the cab shall be 
treated as a station wagon.
    (g) Pursuant to section 401(b)(2)(C) of the Act, standards 
prescribed by the Secretary shall be in addition to, and shall not 
supersede nor modify, any standards prescribed under part II of the 
Interstate Commerce Act and any successor provision of subtitle IV of 
title 49, U.S. Code or the regulations issued thereunder which is 
independently applicable to transportation to which this section 
applies. A violation of any such standard shall also constitute a 
violation of the Act and these regulations.

[48 FR 36741, Aug. 12, 1983; 48 FR 38380, Aug. 23, 1983]



Sec. 500.103  Activities not subject to vehicle safety standards.

    (a) Agricultural machinery and equipment excluded. Vehicle safety 
standards or insurance requirements issued under the Act and these 
regulations do not apply to the transportation of any seasonal or 
migrant agricultural worker on a tractor, combine, harvester, picker, 
other similar machinery and equipment while such worker is actually 
engaged in the planting, cultivating, or harvesting of any agricultural 
commodity or the care of livestock or poultry. This exclusion applies 
only to workers carrying out these activities on such machinery and 
equipment or being engaged in transportation incidental thereto. The 
exclusion does not include the use of such machinery for the 
transportation of any worker under any other circumstances.
    (b) Exclusion for immediate family transporting family members. The 
standards of this subpart do not apply to an individual migrant or 
seasonal agricultural worker when the only other occupants of that 
individual's vehicle consist of his immediate family members as defined 
in Sec. 500.20(o).
    (c) Carpooling. Vehicle safety standards or insurance requirements 
of the Act and these regulations do not apply to carpooling arrangements 
made by the workers themselves, using one of the workers' own vehicles 
and not specifically directed or requested by an agricultural employer 
or agricultural association. Carpooling, however, does not include any 
transportation arrangement in which a farm labor contractor 
participates.

(See also Sec. 500.120)



Sec. 500.104  Department of Labor standards for passenger automobiles and 
station wagons and transportation of seventy-five miles or less.

    Any farm labor contractor, agricultural employer or agricultural 
association providing transportation in passenger automobilies and 
station wagons and other vehicles used only for transportation as 
provided in Sec. 500.102(a) and (d) shall comply with the following 
vehicle safety standards:
    (a) External lights. Head lights, tail lights, stop lights, back-up 
lights, turn signals and hazard warning lights shall be operable.
    (b) Brakes. Every vehicle shall be equipped with operable brakes for 
stopping and holding on an incline. Brake systems shall be free of 
leaks.
    (c) Tires. Tires shall have at least

2/32 inch tread depth, and have no cracks/defects in the sidewall.
    (d) Steering. The steering wheel and associated mechanism shall be 
maintained so as to safely and accurately turn the vehicles.
    (e) Horn. Vehicles shall have an operable air or electric horn.

[[Page 34]]

    (f) Mirrors. Mirrors shall provide the driver full vision of the 
sides and to the rear of the vehicle.
    (g) Windshields/windshield wipers. Windshields and windows may not 
have cracks or opaque obstructions which obscure vision. Vehicles shall 
be equipped with windshield wipers that are operational to allow the 
operator full frontal vision in all weather conditions.
    (h) Fuel system. Fuel lines and the fuel tank shall be free of 
leaks. The tank shall be fitted with a cap to securely cover the filling 
opening.
    (i) Exhaust system. The exhaust system shall discharge carbon 
monoxide away from the passenger compartment and be free of leaks 
beneath the passenger compartment.
    (j) Ventilation. Windows will be operational to allow fresh air to 
the occupants of the vehicle.
    (k) Safe loading. Vehicles will not be driven when loaded beyond the 
manufacturer's gross vehicle weight rating.
    (l) Seats. A seat securely fastened to the vehicle will be provided 
for each occupant or rider in, or on, any vehicle, except that 
transportation which is primarily on private farm roads will be excused 
from this requirement provided the total distance traveled does not 
exceed ten (10) miles, and so long as the trip begins and ends on a farm 
owned or operated by the same employer.
    (m) Handles and latches. Door handles and latches shall be provided 
and maintained to allow exiting capability for vehicle occupants.
    (n) Passenger compartment. Floor and sides of any part of the 
vehicle to be occupied by passengers must be free of openings, rusted 
areas or other defects which are likely to result in injury to 
passengers.



Sec. 500.105  DOT standards adopted by the Secretary.

    (a) Any farm labor contractor, agricultural employer or agricultural 
association providing transportation in vehicles other than passenger 
automobiles and station wagons used for transportation as provided in 
Sec. 500.102 (b), (c), and (e) shall comply with the motor carrier 
safety standards listed in paragraph (b) of this section.
    (b) The Secretary for the purposes of this section has adopted from 
49 CFR part 398 the following pertinent standards. (In adopting these 
standards, editorial changes necessitated by the Act and these 
regulations have been made to conform the language to these 
regulations):
    (1) Qualification of drivers or operators (Source: 49 CFR 398.3)--
(i) Compliance required. Every person subject to this Act who drives a 
motor vehicle or is responsible for the hiring, supervision, training, 
assignment or dispatching of drivers shall comply and be conversant with 
the requirements of this section.
    (ii) Minimum physical requirements. No such person shall drive, nor 
shall any such person require or permit any person to drive, any motor 
vehicle unless such person possesses the following minimum 
qualifications:
    (A) No loss of foot, leg, hand or arm,
    (B) No mental, nervous, organic, or functional disease, likely to 
interfere with safe driving.
    (C) No loss of fingers, impairment of use of foot, leg, fingers, 
hand or arm, or other structural defect or limitation, likely to 
interfere with safe driving.
    (D) Eyesight. Visual acuity of at least 20/40 (Snellen) in each eye 
either without glasses or by correction with glasses; form field of 
vision in the horizontal meridian shall not be less than a total of 140 
degrees; ability to distinguish colors red, green and yellow; drivers 
requiring correction by glasses shall wear properly prescribed glasses 
at all times when driving.
    (E) Hearing. Hearing shall not be less than 10/20 in the better ear, 
for conversational tones, without a hearing aid.
    (F) Liquor, narcotics and drugs. Shall not be addicted to the use of 
narcotics or habit forming drugs, or the excessive use of alcoholic 
beverages or liquors.
    (G) Initial and periodic physical examination of drivers. No such 
person shall drive nor shall any such person require or permit any 
person to drive any motor vehicle unless within the immediately 
preceding 36-month period such person shall have been physically 
examined and shall have been certified in accordance with the provisions 
of paragraph (b)(1)(ii)(H) of this section by a

[[Page 35]]

licensed doctor of medicine or osteopathy as meeting the requirements of 
this subsection.
    (H) Certificate of physical examination. Every person shall have in 
his files at his principal place of business for every driver employed 
or used by him a legible certificate of a licensed doctor of medicine or 
osteopathy based on a physical examination as required by paragraph 
(b)(1)(ii)(G) of this section or a legible photographically reproduced 
copy thereof, and every driver shall have in his possession while 
driving, such a certificate or a photographically reproduced copy 
thereof covering himself.
    (I) Doctor's certificate. The doctor's certificate shall certify as 
follows:

                          Doctor's Certificate

                       (Driver of Migrant Workers)

    This is to certify that I have this day examined ------------ in 
accordance with Sec. 398.3(b) of the Federal Motor Carrier Safety 
Regulations of the Federal Highway Administration and that I find him
    Qualified under said rules [squ]
    Qualified only when wearing glasses [squ]
    I have kept on file in my office a completed examination.
(Date)__________________________________________________________________

(Place)_________________________________________________________________

________________________________________________________________________
    (Signature of examining doctor)

________________________________________________________________________
    (Address of doctor)
________________________________________________________________________
    (Signature of driver)

________________________________________________________________________
    (Address of driver)

    (iii) Minimum age and experience requirements. No person shall 
drive, nor shall any person require or permit any person to drive, any 
motor vehicle unless such person possesses the following minimum 
qualifications:
    (A) Age. Minimum age shall be 21 years.
    (B) Driving skill. Experience in driving some type of motor vehicle 
(including private automobiles) for not less than one year, including 
experience throughout the four seasons.
    (C) Knowledge of regulations. Familiarity with the rules and 
regulations prescribed in this part pertaining to the driving of motor 
vehicles.
    (D) Knowledge of English. Every driver shall be able to read and 
speak the English language sufficiently to understand highway traffic 
signs and signals and directions given in English and to respond to 
official inquiries.
    (E) Driver's permit. Possession of a valid permit qualifying the 
driver to operate the type of vehicle driven by him in the jurisdiction 
by which the permit is issued.
    (2) Driving of motor vehicles (Source: 49 CFR 398.4)--(i) Compliance 
required. Every person shall comply with the requirements of this 
section, shall instruct its officers, agents, representatives and 
drivers with respect thereto, and shall take such measures as are 
necessary to insure compliance therewith by such persons. All officers, 
agents, representatives, drivers, and employees of persons subject to 
this Act directly concerned with the management, maintenance, operation, 
or driving of motor vehicles, shall comply with and be conversant with 
the requirements of this section.
    (ii) Driving rules to be obeyed. Every motor vehicle shall be driven 
in accordance with the laws, ordinances, and regulations of the 
jurisdiction in which it is being operated, unless such laws, ordinances 
and regulations are at variance with specific regulations of the Federal 
Highway Administration, which impose a greater affirmative obligation or 
restraint.
    (iii) [Reserved]
    (iv) Alcoholic beverages. No driver shall drive or be required or 
permitted to drive a motor vehicle, be in active control of any such 
vehicle, or go on duty or remain on duty, when under the influence of 
any alcoholic beverage or liquor, regardless of its alcoholic content, 
nor shall any driver drink any such beverage or liquor while on duty.
    (v) Schedules to conform with speed limits. No person shall permit 
nor require the operation of any motor vehicle between points in such 
period of time as would necessitate the vehicle being operated at speeds 
greater than those prescribed by the jurisdictions in or through which 
the vehicle is being operated.
    (vi) Equipment and emergency devices. No motor vehicle shall be 
driven unless the driver thereof shall have satisfied

[[Page 36]]

himself that the following parts, accessories, and emergency devices are 
in good working order; nor shall any driver fail to use or make use of 
such parts, assessories, and devices when and as needed:

Service brakes, including trailer brake connections.
Parking (hand) brake.
Steering mechanism.
Lighting devices and reflectors.
Tires.
Horn.
Windshield wiper or wipers.
Rear-vision mirror or mirrors.
Coupling devices.
Fire extinguisher, at least one properly mounted.
Road warning devices, at least one red burning fusee and at least three 
flares (oil burning pot torches), red electric lanterns, or red 
emergency reflectors.

    (vii) Safe loading--(A) Distribution and securing of load. No motor 
vehicle shall be driven nor shall any motor carrier permit or require 
any motor vehicle to be driven if it is so loaded, or if the load 
thereon is so improperly distributed or so inadequately secured, as to 
prevent its safe operation.
    (B) Doors, tarpaulins, tailgates and other equipment. No motor 
vehicle shall be driven unless the tailgate, tailboard, tarpaulins, 
doors, all equipment and rigging used in the operation of said vehicle, 
and all means of fastening the load, are securely in place.
    (C) Interference with driver. No motor vehicle shall be driven when 
any object obscures his view ahead, or to the right or left sides, or to 
the rear, or interferes with the free movement of his arms or legs, or 
prevents his free and ready access to the accessories required for 
emergencies, or prevents the free and ready exit of any person from the 
cab or driver's compartment.
    (D) Property on motor vehicles. No vehicle transporting persons and 
property shall be driven unless such property is stowed in a manner 
which will assure: (1) Unrestricted freedom of motion to the driver for 
proper operation of the vehicle; (2) unobstructed passage to all exits 
by any person; and (3) adequate protection to passengers and others from 
injury as a result of the displacement or falling of such articles.
    (E) Maximum passengers on motor vehicles. No motor vehicle shall be 
driven if the total number of passengers exceeds the seating capacity 
which will be permitted on seats prescribed in Sec. 500.105(b)(3)(vi). 
All passengers carried on such vehicle shall remain seated while the 
motor vehicle is in motion.
    (viii) Rest and meal stops. Every person shall provide for 
reasonable rest stops at least once between meal stops. Meal stops shall 
be made at intervals not to exceed six hours and shall be for a period 
of not less than 30 minutes duration.
    (ix) Kinds of motor vehicles in which workers may be transported. 
Workers may be transported in or on only the following types of motor 
vehicles: A bus, a truck with no trailer attached, or a semitrailer 
attached to a truck-tractor provided that no other trailer is attached 
to the semitrailer. Closed vans without windows or means to assure 
ventilation shall not be used.
    (x) Limitation on distance of travel in trucks. Any truck when used 
for the transportation of migrant or seasonal agricultural workers, if 
such workers are being transported in excess of 600 miles, shall be 
stopped for a period of not less than eight consecutive hours either 
before or upon completion of 600 miles travel, and either before or upon 
completion of any subsequent 600 miles travel to provide rest for 
drivers and passengers.
    (xi) Lighting devices and reflectors. No motor vehicle shall be 
driven when any of the required lamps or reflectors are obscured by the 
tailboard, by any and all lighting devices required pursuant to 49 
U.S.C. 3102(c) shall be lighted during darkness or at any other time 
when there is not sufficient light to render vehicles and persons 
visible upon the highway at a distance of 500 feet.
    (xii) Ignition of fuel; prevention. No driver or other person shall: 
(A) Fuel a motor vehicle with the engine running, except when it is 
necessary to run the engine to fuel the vehicle; (B) smoke or expose any 
open flame in the vicinity of a vehicle being fueled; (C) fuel a motor 
vehicle unless the nozzle of the fuel hose is continuously in contact 
with the intake pipe of the fuel tank; (D) permit any other person to 
engage in such activities as would be likely to result in fire or 
explosion.

[[Page 37]]

    (xiii) Reserve fuel. No supply of fuel for the propulsion of any 
motor vehicle or for the operation of any accessory thereof shall be 
carried on the motor vehicle except in a properly mounted fuel tank or 
tanks.
    (xiv) Driving by unauthorized person. Except in case of emergency, 
no driver shall permit a motor vehicle to which he is assigned to be 
driven by any person not authorized to drive such vehicle.
    (xv) Protection of passengers from weather. No motor vehicle shall 
be driven while transporting passengers unless the passengers therein 
are protected from inclement weather conditions such as rain, snow, or 
sleet, by use of the top or protective devices required by 
Sec. 500.105(b)(3)(vi)(E).
    (xvi) Unattended vehicles; precautions. No motor vehicle shall be 
left unattended by the driver until the parking brake has been securely 
set, the wheels chocked, and all reasonable precautions have been taken 
to prevent the movement of such vehicle.
    (xvii) Railroad grade crossings; stopping required; sign on rear of 
vehicle. Every motor vehicle shall, upon approaching any railroad grade 
crossing, make a full stop not more than 50 feet, nor less than 15 feet 
from the nearest rail of such railroad grade crossing, and shall not 
proceed until due caution has been taken to ascertain that the course is 
clear; except that a full stop need not be made at:
    (A) A street car crossing within a business or residence district of 
a municipality;
    (B) A railroad grade crossing where a police officer or a traffic-
control signal (not a railroad flashing signal) directs traffic to 
proceed:
    (C) An abandoned or exempted grade crossing which is clearly marked 
as such by or with the consent of the proper state authority, when such 
marking can be read from the driver's position.

All such motor vehicles shall display a sign on the rear reading, ``This 
Vehicle Stops at Railroad Crossings.''
    (3) Parts and accessories necessary (Source: 49 CFR 398.5)--(i) 
Compliance. Every person and its officers, agents, drivers, 
representatives and employees directly concerned with the installation 
and maintenance of equipment and accessories shall comply and be 
conversant with the requirements and specifications of this part, and no 
person shall operate any motor vehicle, or cause or permit it to be 
operated, unless it is equipped in accordance with said requirements and 
specifications.
    (ii) Lighting devices. Every motor vehicle shall be equipped with 
the lighting devices and reflectors required pursuant to 49 U.S.C. 3102 
(c).
    (iii) Brakes. Every motor vehicle shall be equipped with brakes as 
required pursuant to 49 U.S.C. 3102 (c).
    (iv) Coupling devices; fifth wheel mounting and locking. The lower 
half of every fifth wheel mounted on any truck-tractor or dolly shall be 
securely affixed to the frame thereof by U-bolts of adequate size, 
securely tightened, or by other means providing at least equivalent 
security. Such U-bolts shall not be of welded construction. The 
installation shall be such as not to cause cracking, warping, or 
deformation of the frame. Adequate means shall be provided positively to 
prevent the shifting of the lower half of a fifth wheel on the frame to 
which it is attached. The upper half of every fifth wheel shall be 
fastened to the motor vehicle with at least the security required for 
the securing of the lower half to a truck-tractor or dolly. Locking 
means shall be provided in every fifth wheel mechanism including 
adapters when used, so that the upper and lower halves may not be 
separated without the operation of a positive manual release. A release 
mechanism operated by the driver from the cab shall be deemed to meet 
this requirement. On fifth wheels designed and constructed so as to be 
readly separable, the fifth wheel locking devices shall apply 
automatically on coupling for any motor vehicle the date of manufacture 
of which is subsequent to December 31, 1952.
    (v) Tires. Every motor vehicle shall be equipped with tires of 
adequate capacity to support its gross weight. No motor vehicle shall be 
operated on tires which have been worn so smooth as to expose any tread 
fabric or which have any other defect likely to cause failure. No 
vehicle shall be operated while transporting passengers while

[[Page 38]]

using any tire which does not have tread configurations on that part of 
the tire which is in contact with the road surface. No vehicle 
transporting passengers shall be operated with regrooved, re-capped, or 
re-treaded tires on front wheels.
    (vi) Passenger compartment. Every motor vehicle transporting 
passengers, other than a bus, shall have a passenger compartment meeting 
the following requirements:
    (A) Floors. A substantially smooth floor, without protruding 
obstructions more than two inches high, except as are necessary for 
securing seats or other devices to the floor, and without cracks or 
holes.
    (B) Sides. Side walls and ends above the floor at least 60 inches 
high, by attachment of sideboards to the permanent body construction if 
necessary. Stake body construction shall be construed to comply with 
this requirement only if all six-inch or larger spaces between stakes 
are suitably closed to prevent passengers from falling off the vehicle.
    (C) Nails, screws, splinters. The floor and the interior of the 
sides and ends of the passenger-carrying space shall be free of inwardly 
protruding nails, screws, splinters, or other projecting objects likely 
to be injurious to passengers or their apparel.
    (D) Seats. A seat shall be provided for each worker transported. The 
seats shall be: Securely attached to the vehicle during the course of 
transportation; not less than 16 inches nor more than 19 inches above 
the floor; at least 13 inches deep; equipped with backrests extending to 
a height of at least 36 inches above the floor, with at least 24 inches 
of space between the backrests or between the edges of the opposite 
seats when face to face; desinged to provide at least 18 inches of seat 
for each passenger; without cracks more than two inches wide, and the 
exposed surfaces, if made of wood, planed or sanded smooth and free of 
splinters.
    (E) Protection from weather. Whenever necessary to protect the 
passengers from inclement weather conditions, be equipped with a top at 
least 80 inches high above the floor and facilities for closing the 
sides and ends of the passenger-carrying compartment. Tarpaulins or 
other such removable devices for protection from the weather shall be 
secured in place.
    (F) Exit. Adequate means of ingress and egress to and from the 
passenger space shall be provided on the rear or at the right side. Such 
means of ingress and egress shall be at least 18 inches wide. The top 
and the clear opening shall be at least 60 inches high, or as high as 
the side wall of the passenger space if less than 60 inches. The bottom 
shall be at the floor of the passenger space.
    (G) Gates and doors. Gates or doors shall be provided to close the 
means of ingress and egress and each such gate or door shall be equipped 
with at least one latch or other fastening device of such construction 
as to keep the gate or door securely closed during the course of 
transportation; and readily operative without the use of tools.
    (H) Ladders or steps. Ladders or steps for the purpose of ingress or 
egress shall be used when necessary. The maximum vertical spacing of 
footholds shall not exceed 12 inches, except that the lowest step may be 
not more than 18 inches above the ground when the vehicle is empty.
    (I) Hand holds. Hand holds or devices for similar purpose shall be 
provided to permit ingress and egress without hazard to passengers.
    (J) Emergency exit. Vehicles with permanently affixed roofs shall be 
equipped with at least one emergency exit having a gate or door, latch 
and hand hold as prescribed in paragraphs (b)(3)(vi) (G) and (I) of this 
section and located on a side or rear not equipped with the exit 
prescribed in paragraph (b)(3)(vi)(F) of this section.
    (K) Communication with driver. Means shall be provided to enable the 
passengers to communicate with the driver. Such means may include 
telephone, speaker tubes, buzzers, pull cords, or other mechanical or 
electrical means.
    (vii) Protection from cold. Every motor vehicle shall be provided 
with a safe means of protecting passengers from cold or undue exposure, 
but in no event shall hearters of the following types be used:
    (A) Exhaust heaters. Any type of exhaust heater in which the engine 
exhaust gases are conducted into or

[[Page 39]]

through any space occupied by persons or any heater which conducts 
engine compartment air into any such space.
    (B) Unenclosed flame heaters. Any type of heater employing a flame 
which is not fully enclosed.
    (C) Heaters permitting fuel leakage. Any type of heater from the 
burner of which there could be spillage or leakage of fuel upon the 
tilting or overturning of the vehicle in which it is mounted.
    (D) Heaters permitting air contamination. Any heater taking air, 
heated or to be heated, from the engine compartment or from direct 
contact with any portion of the exhaust system; or any heater taking air 
in ducts from the outside atmosphere to be conveyed through the engine 
compartment, unless said ducts are so constructed and installed as to 
prevent contamination of the air so conveyed by exhaust or engine 
compartment gases.
    (E) Any heater not securely fastened to the vehicle.
    (4) Hours of service of drivers; maximum driving time (Source: 49 
CFR 398.6). No person shall drive nor shall any person permit or require 
a driver employed or used by it to drive or operate for more than 10 
hours in the aggregate (excluding rest stops and stops for meals) in any 
period of 24 consecutive hours, unless such driver be afforded eight 
consecutive hours rest immediately following the 10 hours aggregate 
driving. The term ``24 consecutive hours'' as used in this part means 
any such period starting at the time the driver reports for duty.
    (5) Inspection and maintenance of motor vehicles (Source: 49 CFR 
398.7). Every person shall systematically inspect and maintain or cause 
to be systematically maintained, all motor vehicles and their 
accessories subject to its control, to insure that such motor vehicles 
and accessories are in safe and proper operating condition.

[48 FR 36741, Aug. 12, 1983; 48 FR 38380, Aug. 23, 1983]

                                Insurance



Sec. 500.120  Insurance policy or liability bond is required for each vehicle used to transport any migrant or seasonal agricultural worker.

    A farm labor contractor, agricultural employer or agricultural 
association shall not transport any migrant or seasonal agricultural 
worker or his property in any vehicle such contractor, employer or 
association owns, operates, controls, or causes to be operated unless he 
has an insurance policy or liability bond in effect which insures 
against liability for damage to persons or property arising from the 
ownership, operation, or causing to be operated of such vehicle. 
Generally, the owner or lessor of the vehicle will be responsible for 
providing the required insurance. The insurance requirements do not 
apply to vehicles involved in carpooling arrangements made by the 
workers themselves, using one of the workers' own vehicles and not 
specifically directed or requested by an agricultural employer or 
agricultural association. However, carpooling does not include any 
transportation arrangement in which a farm labor contractor 
participates. Activities exempt from transportation safety standards are 
also exempt from insurance requirements. (See also Sec. 500.103.)



Sec. 500.121  Coverage and level of insurance required.

    (a) Except where a liability bond pursuant to Sec. 500.124 of this 
part has been approved by the Secretary, a farm labor contractor, 
agricultural employer or agricultural association shall, in order to 
meet the insurance requirements in Sec. 500.120, obtain a policy of 
vehicle liability insurance.
    (b) The amount of vehicle liability insurance shall not be less than 
$100,000 for each seat in the vehicle, but in no event is the total 
insurance required to be more than $5,000,000 for any one vehicle. The 
number of seats in the vehicle shall be determined by reference to 
Sec. 500.105(b)(3)(vi). See Sec. 500.122 regarding insurance 
requirements where State

[[Page 40]]

workers' compensation coverage is provided.
    (c) The insurance to be obtained under paragraph (a) of this section 
shall be issued by an insurance carrier licensed or otherwise authorized 
to do business in the State in which the insurance is obtained.
    (d) The vehicle liability insurance to be obtained under paragraph 
(a) of this section shall be endorsed to insure against liability for 
personal injury to employees whose transportation is not covered by 
workers' compensation insurance, and to persons who are not employees; 
and for property damage as specified in (b) of this section.
    (e) An agricultural employer or agricultural association may 
evidence the purchase of liability insurance which covers the workers 
while being transported, as required under paragraph (a) by obtaining 
and making available upon request to the Department of Labor a completed 
liability certificate of insurance showing that insurance conforming to 
the limits required by paragraph (b) and the coverage required by 
paragraph (d) of this section is in effect. A farm labor contractor must 
obtain such a certificate and provide a copy to the Administrator when 
applying for authorization to transport migrant or seasonal agricultural 
workers.
    (f) With respect to an agricultural employer or agricultural 
association, in the absence of the insurance certificate referred to 
under paragraph (e) of this section, the Department of Labor will look 
to the actual policy of insurance in determining compliance with the 
insurance requirements.

[48 FR 36741, Aug. 12, 1983, as amended at 57 FR 3905, Jan. 31, 1992; 61 
FR 24866, May 16, 1996]



Sec. 500.122  Adjustments in insurance requirements when workers' compensation 
coverage is provided under State law.

    (a) If a farm labor contractor, agricultural employer or 
agricultural association referred to in Sec. 500.120 is the employer of 
a migrant or seasonal agricultural worker for purposes of a State 
workers' compensation law and such employer provides workers' 
compensation coverage for such worker in the case of bodily injury or 
death as provided by such State law, the following adjustments in the 
insurance requirements relating to having an insurance policy or 
liability bond apply:
    (1) Except as provided in Sec. 500.123, no vehicle liability 
insurance policy or liability bond shall be required of the employer, if 
such worker is transported only under circumstances for which there is 
coverage under such State law.
    (2) A liability insurance policy or liability bond shall be required 
of the employer for circumstances under which coverage for the 
transportation of such worker is not provided under such State law.
    (b) [Reserved]
    (c) A farm labor contractor, agricultural employer or agricultural 
association who is the employer of a migrant or seasonal agricultural 
worker may evidence the issuance of workers' compensation insurance and 
passenger insurance under paragraph (a) of this section by obtaining and 
making available upon request to the Department of Labor:
    (1) A workers' compensation coverage policy of insurance; and
    (2) A certificate of liability insurance covering transportation of 
all passengers who are not employees and of workers whose transportation 
by the employer is not covered by workers' compensation insurance. See 
Sec. 500.121.
    (d) In the absence of the insurance certificate referred to under 
paragraph (c)(2) of this section, the Department of Labor will look to 
the actual policy of insurance or liability bond in determining 
compliance with the Act and these regulations.

[48 FR 36741, Aug. 12, 1983, as amended at 56 FR 30327, July 2, 1991; 61 
FR 24866, May 16, 1996]



Sec. 500.123  Property damage insurance required.

    (a) When a person who is an employer of a migrant or seasonal 
agricultural worker provides workers' compensation insurance which 
protects such worker in the event of bodily injury or death while the 
worker is being transported, such person must also obtain insurance 
providing a minimum of $50,000 for loss or damage in any one

[[Page 41]]

accident to the property of others (excluding cargo), or evidence of a 
general liability insurance policy that provides the same protection.
    (b) Such person may evidence the purchase of motor carrier insurance 
or other appropriate insurance providing such property damage protection 
by obtaining and making available upon request to the Department of 
Labor a vehicle or other liability certificate of insurance showing that 
such person has obtained the property damage insurance required under 
paragraph (a) of this section.
    (c) In the absence of the insurance certificate referred to in 
paragraph (b) of this section, the Department of Labor will look to the 
actual policy of insurance in determining compliance with paragraph (a) 
of this section.



Sec. 500.124  Liability bond in lieu of insurance policy.

    Financial responsibility in lieu of insurance may be evidenced by a 
liability bond executed as the ``principal'' by the person who will be 
transporting a migrant or seasonal agricultural worker, together with a 
third party identified in the instrument as the ``surety'', to assure 
payment of any liability up to $500,000 for damages to persons or 
property arising out of such person's ownership of, operation of, or 
causing to be operated any vehicle for the transportation of such worker 
in connection with the person's business, activities, or operations. The 
``surety'' shall be one which appears on the list contained in Treasury 
Department Circular 570, or which has been approved by the Secretary 
under the Employee Retirement Income Security Act of 1974 (Pub. L. 93-
406). Treasury Department Circular 570 may be obtained from the U.S. 
Treasury Department, Audit Staff, Bureau of Government Financial 
Operations, Washington, DC 20226.



Sec. 500.125  Qualifications and eligibility of insurance carrier or surety.

    A policy of insurance or liability bond does not satisfy the 
financial responsibility of requirements of the Act and these 
regulations unless the insurer or surety furnishing the policy or bond 
to any farm labor contractor, agricultural employer or agricultural 
association is:
    (a) Legally authorized to issue such policies or bonds in the State 
in which the transportation occurs; or
    (b) Legally authorized to issue such policies or bonds in the State 
in which the farm labor contractor, agricultural employer or 
agricultural association has its principal place of business or 
permanent residence and is willing to designate a person upon whom 
process, issued by or under the authority of any court having 
jurisdiction of the subject matter, may be served in any proceeding at 
law or equity brought in any State in which the transportation occurs; 
or
    (c) Legally authorized to issue such policies or bonds in any State 
of the United States and eligible as an excess or surplus lines insurer 
in any State in which business is written and is willing to designate a 
person upon whom process, issued by or under the authority of any court 
having jurisdiction of the subject matter, may be served in any 
proceeding at law or equity brought in any State in which the 
transportation occurs.



Sec. 500.126  Duration of insurance or liability bond.

    Any insurance policy or liability bond which is obtained pursuant to 
the Act shall provide the required coverage for the full period during 
which the person shall be engaged in transporting any migrant or 
seasonal agricultural worker within the meaning of the Act.



Sec. 500.127  Limitations on cancellation of insurance or liability bond 
of registered farm labor contractors.

    Any insurance policy or liability bond obtained by a farm labor 
contractor who is required to register with the Department of Labor 
shall provide that it shall not be cancelled, rescinded, or suspended, 
nor become void for any reason whatsoever during such period in which 
the insurance or liability bond is required by the Act to be effective, 
except upon the expiration of the term for which it is written; or 
unless the parties desiring to cancel shall have first given thirty (30) 
days notice to the Administrator. The notice will include a statement 
setting forth the

[[Page 42]]

reason for cancellation, rescission, suspension, or any other 
termination of such policy or bond. The notice shall be in writing and 
forwarded via certified or registered mail, addressed to the 
Administrator of the Wage and Hour Division, U.S. Department of Labor, 
Washington, DC 20210. Said thirty (30) days notice shall commence to run 
from the date notice is actually received by the Administrator.



Sec. 500.128  Cancellation of insurance policy or liability bond not 
relief from insurance requirements.

    Cancellation, rescission, suspension, or any other termination of 
any insurance policy or liability bond required by the Act does not 
relieve a person who transports or causes to be transported any migrant 
or seasonal agricultural worker in any vehicle under

his ownership or control of the responsibility to comply with the 
insurance requirements specified in Secs. 500.121, 500.122 and 500.123.

                        Housing Safety and Health



Sec. 500.130  Application and scope of safety and health requirement.

    (a) Each person who owns or controls a facility or real property 
which is used as housing for any migrant agricultural worker must ensure 
that the facility or real property complies with all substantive Federal 
and State safety and health standards applicable to such housing. If 
more than one person is involved in providing the housing for any 
migrant agricultural worker (for example, when an agricultural employer 
owns it and a farm labor contractor or any other person operates it), 
both persons are responsible for ensuring that the facility or real 
property meets the applicable Federal and State housing standards.
    (b) A farm labor contractor, agricultural employer, agricultural 
association or any other person is deemed an ``owner'' of a housing 
facility or real property if said person has a legal or equitable 
interest in such facility or real property.
    (c) A farm labor contractor, agricultural employer, agricultural 
association or any other person is in ``control'' of a housing facility 
or real property, regardless of the location of such facility, if said 
person is in charge of or has the power or authority to oversee, manage, 
superintend or administer the housing facility or real property either 
personally or through an authorized agent or employee, irrespective of 
whether compensation is paid for engaging in any of the aforesaid 
capacities.
    (d) The Occupational Safety and Health Administration (OSHA) is the 
agency of the U.S. Department of Labor which administers the 
Occupational Safety and Health Act (29 U.S.C. 651 et seq.) which 
provides for the establishment of safety and health standards generally.
    (e) The Employment and Training Administration (ETA) is the agency 
of the U.S. Department of Labor which administers the U.S. Employment 
Service pursuant to the Wagner-Peyser Act (29 U.S.C. 49 et seq.) 
including the interstate clearance order system.



Sec. 500.131  Exclusion from housing safety and health requirement.

    The housing safety and health requirements do not apply to any 
person who, in the ordinary course of that person's business, regularly 
provides housing on a commercial basis to the general public and who 
provides housing to any migrant agricultural worker of the same 
character and on the same or comparable terms and conditions as provided 
to the general public. Migrant labor housing shall not be brought within 
this exception simply by offering lodging to the general public.



Sec. 500.132  Applicable Federal standards: ETA and OSHA housing standards.

    (a) The Secretary has determined that the applicable Federal housing 
standards are the standards promulgated by the Employment and Training 
Administration, at 20 CFR 654.404 et seq. and the standards promulgated 
by the Occupational Safety and Health Administration, at 29 CFR 
1910.142. Except as provided in Sec. 500.131, all migrant housing is 
subject to either the ETA standards or the OSHA standards, as follows:
    (1) A person who owns or controls a facility or real property to be 
used for

[[Page 43]]

housing any migrant agricultural worker, the construction of which was 
begun on or after April 3, 1980, and which was not under a contract for 
construction as of March 4, 1980, shall comply with the substantive 
Federal safety and health standards promulgated by OSHA at 29 CFR 
1910.142. These OSHA standards are enforceable under MSPA, irrespective 
of whether housing is, at any particular point in time, subject to 
inspection under the Occupational Safety and Health Act.
    (2) A person who owns or controls a facility or real property to be 
used for housing any migrant agricultural worker which was completed or 
under construction prior to April 3, 1980, or which was under a contract 
for construction prior to March 4, 1980, may elect to comply with either 
the substantive Federal safety and health standards promulgated by OSHA 
at 29 CFR 1910.142 or the standards promulgated by ETA at 20 CFR 654.404 
et seq. The ETA standards were established to provide housing 
requirements for migrant housing used by an employer obtaining migrant 
workers through the U.S. Employment Service. The owner or operator of 
such housing may continue to rely on those standards, rather than OSHA 
standards, even if the housing is not currently being provided pursuant 
to a USES job placement program.



Sec. 500.133  Substantive Federal and State safety and health standards defined.

    Substantive safety and health standards include, but are not limited 
to, those that provide fire prevention, an adequate and sanitary supply 
of water,

plumbing maintenance, structurally sound construction of buildings, 
effective maintenance of those buildings, provision of adequate heat as 
weather conditions require, and reasonable protections for inhabitants 
from insects and rodents. Substantive housing standards do not include 
technical or procedural violations of safety and health standards.



Sec. 500.134  Compliance with State standards.

    Compliance with the substantive Federal housing safety and health 
standards shall not excuse noncompliance with applicable substantive 
State housing safety and health standards.



Sec. 500.135  Certificate of housing inspection.

    (a) Except as provided in paragraph (c) of this section, a facility 
or real property to be used for housing a migrant agricultural worker 
shall not be occupied by any migrant agricultural worker unless either a 
State or local health authority or other appropriate agency, including a 
Federal agency, has certified that the facility or real property meets 
applicable safety and health standards.
    (b) Except as provided in paragraph (c) of this section, the person 
who owns or controls a facility or real property shall not permit it to 
be occupied by any migrant agricultural worker unless a copy of a 
certificate of occupancy from the State, local or Federal agency which 
conducted the housing safety and health inspection is posted at the site 
of the facility or real property. The original of such certificate of 
occupancy shall be retained by such person for three years and made 
available for inspection in accordance with section 512 of the Act.
    (c) If a request for an inspection of a facility or real property is 
made to the appropriate State, local or Federal agency at least forty-
five (45) days prior to the date on which it is to be occupied by a 
migrant agricultural worker but the agency has not conducted an 
inspection by such date, the facility or property may be occupied by 
migrant agricultural workers unless prohibited by State law.
    (d) Receipt and posting of a certificate of occupancy as provided 
under paragraph (b) of this section, or the failure of an agency to 
inspect a facility or property within the forty-five (45) day time 
period, shall not relieve the person who owns or controls a facility or 
property from the responsibility of ensuring that such facility or 
property meets the applicable State and Federal safety and health 
standards. Once such facility or property is occupied, such person shall 
supervise and continually maintain such facility

[[Page 44]]

or property so as to ensure that it remains in compliance with the 
applicable safety and health standards.



                         Subpart E--Enforcement



Sec. 500.140  General.

    Whenever the Secretary believes that the Act or these regulations 
have been violated he shall take such action and institute such 
proceedings as he deems appropriate, including (but not limited to) the 
following:
    (a) Recommend to the Attorney General the institution of criminal 
proceedings against any person who willfully and knowingly violates the 
Act or these regulations;
    (b) Recommend to the Attorney General the institution of criminal 
proceedings against any farm labor contractor who recruits, hires, 
employs, or uses, with knowledge, the services of any illegal alien, as 
defined in Sec. 500.20(n) of these regulations, if such farm labor 
contractor has:
    (1) Been refused issuance or renewal of, or has failed to obtain, a 
Certificate of Registration, or
    (2) Is a farm labor contractor whose certificate has been suspended 
or revoked;
    (c) Petition any appropriate District Court of the United States for 
temporary or permanent injunctive relief to prohibit violation of the 
Act or these regulations by any person;
    (d) Assess a civil money penalty against any person for any 
violation of the Act or these regulations;
    (e) Refer any unpaid civil money penalty which has become a final 
and unappealable order of the Secretary or a final judgment of a court 
in favor of the Secretary to the Attorney General for recovery;
    (f) Revoke or suspend or refuse to issue or renew any Certificate of 
Registration authorized by the Act or these regulations;
    (g) Deny the facilities and services afforded by the Wagner-Peyser 
Act to any farm labor contractor who refuses or fails to produce, when 
asked, a valid Certificate of Registration;
    (h) Institute action in any appropriate United States District Court 
against any person who, contrary to the provisions of section 505(a) of 
the Act, discriminates against any migrant or seasonal agricultural 
worker.



Sec. 500.141  Concurrent actions.

    The taking of any one of the actions referred to in Sec. 500.140 
shall not be a bar to the concurrent taking of any other action 
authorized by the Act and these regulations.



Sec. 500.142  Representation of the Secretary.

    (a) Except as provided in section 518(a) of title 28, U.S. Code, 
relating to litigation before the Supreme Court, the Solicitor of Labor 
may appear for and represent the Secretary in any civil litigation 
brought under the Act; but all such litigation shall be subject to the 
direction and control of the Attorney General.
    (b) The Solicitor of Labor, through the authorized representatives 
identified in Sec. 500.231, shall represent the Secretary in all 
administrative hearings under the Act and these regulations.



Sec. 500.143  Civil money penalty assessment.

    (a) A civil money penalty may be assessed for each violation of the 
Act or these regulations.
    (b) In determining the amount of penalty to be assessed for any 
violation of the Act or these regulations the Secretary shall consider 
the type of violation committed and other relevant factors, including 
but not limited to the following:
    (1) Previous history of violation or violations of this Act and the 
Farm Labor Contractor Registration Act;
    (2) The number of workers affected by the violation or violations;
    (3) The gravity of the violation or violations;
    (4) Efforts made in good faith to comply with the Act (such as when 
a joint employer agricultural employer/association provides employment-
related benefits which comply with applicable law to agricultural 
workers, or takes reasonable measures to ensure farm labor contractor 
compliance with legal obligations);
    (5) Explanation of person charged with the violation or violations;
    (6) Commitment to future compliance, taking into account the public

[[Page 45]]

health, interest or safety, and whether the person has previously 
violated the Act;
    (7) The extent to which the violator achieved a financial gain due 
to the violation, or the potential financial loss or potential injury to 
the workers.

[48 FR 36741, Aug. 12, 1983, as amended at 62 FR 11748, Mar. 12, 1997]



Sec. 500.144  Civil money penalties--payment and collection.

    Where the assessment is directed in a final order by the Secretary 
or in a final judgment issued by a United States District Court, the 
amount of the penalty is immediately due and payable to the United 
States Department of Labor. The person assessed such penalty shall remit 
promptly the amount thereof, as finally determined, to the Secretary by 
certified check or by money order, made payable to the order of ``Wage 
and Hour Division, Labor.'' The remittance shall be delivered or mailed 
either to the Administrator, in Washington, DC, or to the Wage and Hour 
Division Regional Office for the area in which the violations occurred.



Sec. 500.145  Registration determinations.

    Section 500.51 set forth the standards under which the Secretary may 
refuse to issue or to renew, or may suspend or revoke, a Certificate of 
Registration (including a Farm Labor Contractor Employee Certificate of 
Registration).



Sec. 500.146  Continuation of matters involving violations of FLCRA.

    (a) Any matter involving the revocation, suspension, or refusal to 
renew a Certification of Registration issued under FLCRA and any matter 
involving the refusal to issue a certificate authorized under FLCRA 
shall continue through final administrative determination in accordance 
with the provisions of FLCRA and the regulations issued thereunder.
    (b) Any matter involving the assessment of a civil money penalty for 
a violation of FLCRA will continue through final administrative 
determination in accordance with the provisions of FLCRA and the 
regulations issued thereunder.
    (c) The rules of practice for implementation of administrative 
enforcement for violations of FLCRA referred to the Office of the Chief 
Administrative Law Judge on or after April 14, 1983, shall be the rules 
of practice provided in Secs. 500.220 through 500.262 and the official 
record shall be maintained in accordance with Secs. 500.270 and 500.271 
of these regulations.
    (d) The rules of practice for implementation of administrative 
enforcement for violations of FLCRA referred to the Office of the Chief 
Administrative Law Judge prior to April 14, 1983 shall be the rules of 
practice provided in 29 CFR 40.201 through 40.262.



Sec. 500.147  Continuation of matters involving violations of section 106 
of MSPA.

    Any matter involving the revocation, suspension, refusal to issue or 
to renew a certificate of registration or any matter involving the 
assessment of a civil money penalty, for a violation of section 106 of 
MSPA, which occurred prior to June 1, 1987, shall continue through final 
administrative determination in accordance with the provisions of MSPA 
and these regulations.

[54 FR 13329, Mar. 31, 1989]

               Agreements With Federal and State Agencies



Sec. 500.155  Authority.

    Section 513 of the Act authorizes the Secretary to enter into 
agreements with Federal and State agencies (a) to use their facilities 
and services, (b) to delegate (subject to subsection 513(b) of the Act) 
to Federal and State agencies such authority (other than rulemaking) as 
he determines may be useful in carrying out the purposes of the Act, and 
(c) to allocate or transfer funds to, or otherwise pay or reimburse, 
such agencies for expenses incurred pursuant to paragraphs (a) or (b) of 
this section.



Sec. 500.156  Scope of agreements with Federal agencies.

    Every agreement between the Secretary and any other Federal agency 
under the authority referred to in Sec. 500.155 of this part shall 
contain terms and conditions mutually agreeable to

[[Page 46]]

both parties, and shall contain such delegation of authority as the 
Secretary deems useful.



Sec. 500.157  Scope of agreements with State agencies.

    (a) Every agreement between the Secretary and any State agency under 
the authority referred to in Sec. 500.155 of this part shall be in 
writing.
    (b) Any delegation to a State agency by the Secretary under such 
authority shall be made pursuant to approval of a written State plan 
submitted in accordance with Sec. 500.159 which shall: (1) Include a 
description of each function to be performed, the method of performing 
each such function, and the resources to be devoted to the performance 
of each such function, (2) provide assurances satisfactory to the 
Secretary that the State agency will comply with its description under 
paragraph (b)(1) of this section and that the State agency's performance 
of the delegated functions will be at least comparable to the 
performance of such functions by the Department of Labor; and (3) 
contain a certification of the Attorney General of such State, or, if 
the Attorney General is not authorized to make such a statement, the 
State official who is so authorized, that an agreement pursuant to such 
State plan is valid under the laws of that State.



Sec. 500.158  Functions delegatable.

    The Secretary may delegate to the State such functions as he deems 
useful including the
    (a) Receipt, handling and processing of applications for 
certificates of registration;
    (b) Issuance of certificates of registration;
    (c) Conduct of various investigations; and
    (d) Enforcement of the Act.



Sec. 500.159  Submission of plan.

    (a) Any State agency desiring to enter into an agreement pursuant to 
section 513 of the Act shall submit a State plan in such form and in 
such detail as the Secretary shall direct.
    (b) Each such plan shall include, at least, the following:
    (1) The delegation sought;
    (2) The State authority for performing such delegated functions;
    (3) A description of the manner in which the State intends to carry 
out such functions; and
    (4) The estimated cost of carrying out such functions.



Sec. 500.160  Approved State plans.

    (a) The Secretary, in accordance with the authority referred to in 
Sec. 500.155 of this part, has delegated the following functions to the 
States listed herein below:

------------------------------------------------------------------------
                State                              Function
------------------------------------------------------------------------
Florida.............................  Receive, handle, process
                                       applications and issue
                                       certificates of registration.
New Jersey..........................  Receive, handle, process
                                       applications and issue
                                       certificates of registration.
Virginia............................  Receive, handle, process
                                       applications and issue
                                       certificates of registration.
------------------------------------------------------------------------

    (b) Every State agreement entered into pursuant to the authority 
referred to in Sec. 500.155 of this part shall be available for public 
inspection and copying in accordance with 29 CFR part 70.
    (c) Every enumerated delegated function shall be valid in all 
states.

[48 FR 36741, Aug. 12, 1983, as amended at 49 FR 5112, Feb. 10, 1984; 50 
FR 42163, Oct. 18, 1985]



Sec. 500.161  Audits.

    The Secretary shall conduct audits as he deems necessary of the 
State plans, but on not less than an annual basis.



Sec. 500.162  Reports.

    The Secretary shall require such reports as he deems necessary of 
activities conducted pursuant to State plans, but on not less than an 
annual basis.

                         Central Public Registry



Sec. 500.170  Establishment of registry.

    The Administrator shall establish a central public registry of all 
persons issued a Certificate of Registration or a Farm Labor Contractor 
Employee Certificate. The central public registry shall be available at 
the Regional Offices of the Wage and Hour Division and its National 
Office in Washington, DC. Information filed therein shall be made 
available upon request. Requests

[[Page 47]]

for information contained in the registry may also be directed by mail 
to the Administrator, Wage and Hour Division. Attn: MSPA, U.S. 
Department of Labor, Washington, DC 20210. Alternatively, requests for 
registry information may be made by telephone by calling 1-866-4US-WAGE 
(1-866-487-9243), a toll-free number, during the hours of 8 a.m. to 5 
p.m., in your time zone, Monday through Friday.

[67 FR 76986, Dec. 16, 2002]



                  Subpart F--Administrative Proceedings

                                 General



Sec. 500.200  Establishment of procedures and rules of practice.

    This subpart codifies and establishes the procedures and rules of 
practice necessary for the administrative enforcement of the Act.



Sec. 500.201  Applicability of procedures and rules.

    (a) The procedures and rules contained herein prescribe the 
administrative process necessary for a determination:
    (1) To suspend or revoke, or to refuse to issue or renew, a 
Certificate of Registration authorized under the Act and these 
regulations; and
    (2) To impose an assessment of civil money penalties for violations 
of the Act or of these regulations.
    (b) The procedures and rules contained herein also specify the 
administrative responsibility under section 102(5) of the Act with 
regard to a designation by a court of the Secretary as an agent of an 
applicant for a certificate of registration in any action against such 
applicant, if said applicant has left the jurisdiction in which the 
action is commenced or otherwise has become unavailable to accept 
service.

                     Procedures Relating to Hearing



Sec. 500.210  Written notice of determination required.

    (a) Whenever the Secretary determines to suspend or revoke, or to 
refuse to issue or renew, a Certificate of Registration, the applicant 
for or the holder of such certificate shall be notified in writing of 
such determination.
    (1) In cases involving a determination relating to a Certificate of 
Registration applied for by, or issued to, a farm labor contractor, 
written notice shall also be given to every applicant for or holder of a 
Certificate of Registration as an employee of such contractor.
    (2) In cases involving a determination relating to a Farm Labor 
Contractor Employee Certificate of Registration, written notice shall 
also be given to the farm labor contractor of such applicant or 
certificate holder.
    (b) Whenever the Secretary determines to assess a civil money 
penalty for a violation of the Act or these regulations, the person 
against whom such penalty is assessed shall be notified in writing of 
such determination.



Sec. 500.211  Contents of notice.

    The notice required by Sec. 500.210 shall:
    (a) Set forth the determination of the Secretary and the reason or 
reasons therefor.
    (b) Set forth, in the case of a civil money penalty assessment:
    (1) A description of each violation; and
    (2) The amount assessed for each violation.
    (c) Set forth the right to request a hearing on such determination.
    (d) Inform any affected person or persons that in the absence of a 
timely request for a hearing, the determination of the Secretary shall 
become final and unappealable.
    (e) Set forth the time and method for requesting a hearing, and the 
procedures relating thereto, as set forth in Sec. 500.212.



Sec. 500.212  Request for hearing.

    (a) Any person desiring to request an administrative hearing on a 
determination referred to in Sec. 500.212 shall make such request in 
writing to the official who issued the determination, at the Wage and 
Hour Division address appearing on the determination notice. Such 
request must be made no later than thirty (30) days after the date of 
issuance of the notice referred to in Sec. 500.210.

[[Page 48]]

    (b) The request for such hearing shall be delivered in person or by 
mail to the Wage and Hour Division office at the address appearing on 
the determination notice upon which the request for a hearing is based, 
within the time set forth in paragraph (a) of this section. For the 
affected person's protection, if the request is by mail, it should be by 
certified mail.
    (c) No particular form is prescribed for any request for hearing 
permitted by this part. However, any such request shall:
    (1) Be typewritten or legibly written on size 8\1/
2\x11 paper;
    (2) Specify the issue or issues stated in the notice of 
determination giving rise to such request;
    (3) State the specific reason or reasons why the person requesting 
the hearing believes such determination is in error;
    (4) Be signed by the person making the request or by an authorized 
representative of such person; and
    (5) Include the address at which such person or authorized 
representative desires to receive further communications relating 
thereto.
    (d) Civil money penalties under FLCRA shall be treated as follows:
    (1) Determinations to assess civil money penalties for violations of 
FLCRA made prior to April 14, 1983 shall continue until a final 
administrative determination shall have been made in accordance with 29 
CFR part 40.
    (2) Determinations to assess civil money penalties for violations of 
FLCRA arising prior to April 14, 1983, made on or after April 14, 1983, 
shall continue until a final administrative determination shall have 
been made in accordance with these regulations.

[48 FR 36741, Aug. 12, 1983, as amended at 54 FR 13329, Mar. 31, 1989; 
57 FR 5942, Feb. 18, 1992]

               Procedures Relating to Substituted Service



Sec. 500.215  Change of address.

    (a) Pursuant to section 105(1) of the Act, every holder of a 
Certificate of Registration shall notify the Secretary within thirty 
(30) days of each change of permanent place of residence. Said persons 
may also furnish additional mailing addresses.
    (b) The notification required in paragraph (a) of this section shall 
be in writing, by certified mail and addressed to the Administrator, 
Wage and Hour Division, Employment Standards Administration, 200 
Constitution Avenue, NW., Washington, DC 20210.
    (c) Such change of address shall be deemed effective upon receipt by 
the Administrator, unless a later date is specified in the notice.



Sec. 500.216  Substituted service.

    (a) Pursuant to section 102(5) of the Act, the Secretary, when so 
designated by a court, shall accept service of summons in any action 
arising under the Act or these regulations against any applicant for or 
any holder of a Certificate of Registration who has left the 
jurisdiction in which such action is commenced or otherwise has become 
unavailable to accept such service.
    (b) Acceptance of service of summons referred to in paragraph (a) of 
this section shall be under such terms and conditions as are set by the 
court in its designation of the Secretary for the purpose of section 
102(5) of the Act.
    (c) To be effective, such service shall be made by delivery 
personally or by certified mail, either to the Administrator of the Wage 
and Hour Division in Washington, DC, or to the Administrator's 
authorized representative located in the area in which the action has 
been commenced.



Sec. 500.217  Responsibility of Secretary for service.

    Upon receipt of any substituted service, as described in 
Sec. 500.216, the same shall be forwarded by certified mail to the 
permanent address furnished by the person for whom service is accepted 
and to such other address as may be determined appropriate by the 
Secretary. Such mailing shall complete the Secretary's responsibility in 
connection with the substituted service requirement of the Act.

[[Page 49]]

                            Rules of Practice



Sec. 500.219  General.

    Except as specifically provided in these regulations, the ``Rules of 
Practice and Procedure for Administrative Hearings Before the Office of 
Administrative Law Judges'' established by the Secretary at 29 CFR part 
18 shall apply to administrative proceedings under MSPA.

[48 FR 36741, Aug. 21, 1983. Redesignated at 54 FR 13329, Mar. 31, 1989]



Sec. 500.220  Service of determinations and computation of time.

    (a) Service of determinations to suspend, revoke, refuse to issue, 
or refuse to renew a certificate of registration or to assess a civil 
money penalty shall be made by personal service to the individual, 
officer of a corporation, or attorney of record or by mailing the 
determination to the last known address of the individual, officer, or 
attorney. If done by certified mail, service is complete upon mailing. 
If done by regular mail or in person, service is complete upon receipt 
by the addressee or the addressee's representative;
    (b) Time will be computed beginning with the day following the 
action and includes the last day of the period unless it is a Saturday, 
Sunday, or Federally observed holiday, in which case the time period 
includes the next business day; and
    (c) When a request for hearing is filed by mail, five (5) days shall 
be added to the prescribed period during which the party has the right 
to request a hearing on the determination.

[54 FR 13329, Mar. 31, 1989]



Sec. 500.221  Commencement of proceeding.

    Each administrative proceeding permitted under the Act and these 
regulations shall be commenced upon receipt of a timely request for 
hearing filed in accordance with Sec. 500.212.



Sec. 500.222  Designation of record.

    Except as provided in paragraph (c) of this section:
    (a) Each administrative proceeding instituted under the Act and 
these regulations shall be identified of record by a number preceded by 
the year and the letters ``MSPA'' and followed by one or more of the 
following designations:
    (1) Proceedings involving the ``refusal to issue or to renew, or to 
suspend or to revoke Certificate of Registration'' shall be designated 
as ``R''.
    (2) Proceedings involving the ``assessment of civil money 
penalties'' shall be designated as ``P''.
    (3) Proceedings involving both Certificate of Registration and 
assessment of civil money penalties shall be designated as ``R and P''.
    (b) The number, letter(s), and designation assigned to each such 
proceeding shall be clearly displayed on each pleading, motion, brief, 
or other formal document filed and docketed of record.
    (c) Each administrative proceeding involving violations of FLCRA 
prior to April 14, 1983 and filed with the Office of the Chief 
Administrative Law Judge on or after April 14, 1983, shall be identified 
of record by a number preceded by the year and the letters ``FLCRA-
MSPA'' and followed by one or more of the letter designations provided 
in paragraphs (a)(1) through (a)(3) of this section, i.e., (year) -
FLCRA-MSPA-()-(R and/or P).



Sec. 500.223  Caption of proceeding.

    (a) Each administrative proceeding instituted under the Act and 
these regulations shall be captioned in the name of the person 
requesting such hearing, and shall be styled as follows:

In The Matter of ----, Respondent.

    (b) For the purposes of such administrative proceeding the 
``Secretary of Labor'' shall be identified as plaintiff and the person 
requesting such hearing shall be named as respondent.

                          Referral for Hearing



Sec. 500.224  Referral to Administrative Law Judge.

    (a) Upon receipt of a timely request for a hearing filed pursuant to 
and in accordance with Sec. 500.212, the Secretary, by the Associate 
Solicitor for the Division of Fair Labor Standards or by the Regional 
Solicitor for the Region in which the action arose, shall, by Order of 
Reference, promptly refer

[[Page 50]]

an authenticated copy of the notice of administrative determination 
complained of, and the original or a duplicate copy of the request for 
hearing signed by the person requesting such hearing or by the 
authorized representative of such person, to the Chief Administrative 
Law Judge, for a determination in an administrative proceeding as 
provided herein. The notice of administrative determination and request 
for hearing shall be filed of record in the Office of the Chief 
Administrative Law Judge and shall, respectively, be given the effect of 
a complaint and answer thereto for purposes of the administrative 
proceeding, subject to any amendment that may be permitted under these 
regulations.
    (b) In cases involving a denial, suspension, or revocation of a 
Certificate of Registration (Farm Labor Contractor Certificate; Farm 
Labor Contractor Employee Certificate) or ``certificate action,'' 
including those cases where the farm labor contractor has requested a 
hearing on civil money penalty(ies) as well as on the certificate 
action, the date of the hearing shall be not more than sixty (60) days 
from the date on which the Order of Reference is filed. No request for 
postponement shall be granted except for compelling reasons.
    (c) A copy of the Order of Reference, together with a copy of these 
regulations, shall be served by counsel for the Secretary upon the 
person requesting the hearing, in the manner provided in 29 CFR 18.3.

[48 FR 36741, Aug. 12, 1983, as amended at 61 FR 24866, May 16, 1996]



Sec. 500.225  Notice of docketing.

    The Chief Administrative Law Judge shall promptly notify the parties 
of the docketing of each matter.



Sec. 500.226  Service upon attorneys for the Department of Labor--number of copies.

    Two copies of all pleadings and other documents required for any 
administrative proceeding provided herein shall be served on the 
attorneys for the Department of Labor. One copy shall be served on the 
Associate Solicitor, Division of Fair Labor Standards, Office of the 
Solicitor, U.S. Department of Labor, 200 Constitution Avenue, NW., 
Washington, DC 20210, and one copy on the Attorney representing the 
Department in the proceeding.

               Procedures Before Administrative Law Judge



Sec. 500.231  Appearances; representation of the Department of Labor.

    The Associate Solicitor, Division of Fair Labor Standards, and such 
other counsel, as designated, shall represent the Secretary in any 
proceeding under these regulations.



Sec. 500.232  Consent findings and order.

    (a) General. At any time after the commencement of a proceeding 
under this part, but prior to the reception of evidence in any such 
proceeding, a party may move to defer the receipt of any evidence for a 
reasonable time to permit negotiation of an agreement containing consent 
findings and an order disposing of the whole or any part of the 
proceeding. The allowance of such deferment and the duration thereof 
shall be at the discretion of the Administrative Law Judge, after 
consideration of the nature of the proceeding, the requirements of the 
public interest, the representations of the parties, and the probability 
of an agreement being reached which will result in a just disposition of 
the issues involved.
    (b) Content. Any agreement containing consent findings and an order 
disposing of a proceeding or any part thereof shall also provide:
    (1) That the order shall have the same force and effect as an order 
made after full hearing;
    (2) That the entire record on which any order may be based shall 
consist solely of the notice of administrative determination (or amended 
notice, if one is filed), and the agreement;
    (3) A waiver of any further procedural steps before the 
Administrative Law Judge; and
    (4) A waiver of any right to challenge or contest the validity of 
the findings and order entered into in accordance with the agreement.

[[Page 51]]

    (c) Submission. On or before the expiration of the time granted for 
negotiations, the parties or their authorized representatives or their 
counsel may:
    (1) Submit the proposed agreement for consideration by the 
Administrative Law Judge; or
    (2) Inform the Administrative Law Judge that agreement cannot be 
reached.
    (d) Disposition. In the event an agreement containing consent 
findings and an order is submitted within the time allowed therefor, the 
Administrative Law Judge, within thirty (30) days thereafter, shall, if 
satisfied with its form and substance, accept such agreement by issuing 
a decision based upon the agreed findings.

                         Post-Hearing Procedures



Sec. 500.262  Decision and order of Administrative Law Judge.

    (a) The Administrative Law Judge shall prepare, as promptly as 
practicable after the expiration of the time set for filing proposed 
findings and related papers a decision on the issues referred by the 
Secretary.
    (b) In cases involving certificate actions as described in 
Sec. 500.224(b), the Administrative Law Judge shall issue a decision 
within ninety (90) calendar days after the close of the hearing.
    (c) The decision of the Administrative Law Judge shall be limited to 
a determination whether the respondent has violated the Act or these 
regulations, and the appropriateness of the remedy or remedies imposed 
by the Secretary. The Administrative Law Judge shall not render 
determinations on the legality of a regulatory provision or the 
constitutionality of a statutory provision.
    (d) The decision of the Administrative Law Judge, for purposes of 
the Equal Access to Justice Act (5 U.S.C. 504), shall be limited to 
determinations of attorney fees and/or other litigation expenses in 
adversary proceedings requested pursuant to Sec. 500.212 which involve 
the modification, suspension or revocation of a Certificate of 
Registration issued under the Act and these Regulations, and/or the 
imposition of a civil money penalty assessed for a violation of the Act 
or these Regulations. The Administrative Law Judge shall have no power 
or authority to award attorney fees and/or other litigation expenses 
pursuant to the provisions of the Equal Access to Justice Act or 
Regulations issued thereunder in any proceeding under MSPA or these 
Regulations involving the refusal to issue or renew a Certificate of 
Registration.
    (e) The decision of the Administrative Law Judge shall include a 
statement of findings and conclusions, with reasons and basis therefor, 
upon each material issue presented on the record. The decision shall 
also include an appropriate order which may be to affirm, deny, reverse, 
or modify, in whole or in part, the determination of the Secretary. The 
reason or reasons for such order shall be stated in the decision.
    (f) The Administrative Law Judge shall transmit to the Chief 
Administrative Law Judge the entire record including the decision. The 
Chief Administrative Law Judge shall serve copies of the decision on 
each of the parties.
    (g) The decision when served shall constitute the final order of the 
Secretary unless the Secretary, pursuant to section 103(b)(2) or section 
503(b)(2) of the Act, modifies or vacates the decision and order of the 
Administrative Law Judge.
    (h) Except as provided in Secs. 500.263 through 500.268, the 
administrative remedies available to the parties under the Act will be 
exhausted upon service of the decision of the Administrative Law Judge.

[48 FR 36741, Aug. 12, 1983, as amended at 61 FR 24866, May 16, 1996]

      Modification or Vacation of Order of Administrative Law Judge



Sec. 500.263  Authority of the Secretary.

    The Secretary may modify or vacate the Decision and Order of the 
Administrative Law Judge whenever he concludes that the Decision and 
Order:
    (a) Is inconsistent with a policy or precedent established by the 
Department of Labor,
    (b) Encompasses determinations not within the scope of the authority 
of the Administrative Law Judge,
    (c) Awards attorney fees and/or other litigation expenses pursuant 
to the

[[Page 52]]

Equal Access to Justice Act which are unjustified or excessive, or
    (d) Otherwise warrants modifying or vacating.

[54 FR 13330, Mar. 31, 1989]



Sec. 500.264  Procedures for initiating review.

    (a) Within twenty (20) days after the date of the decision of the 
Administrative Law Judge, the respondent, the Administrator, or any 
other party desiring review thereof, may file with the Secretary an 
original and two copies of a petition for issuance of a Notice of Intent 
as described under Sec. 500.265. The petition shall be in writing and 
shall contain a concise and plain statement specifying the grounds on 
which review is sought. A copy of the Decision and Order of the 
Administrative Law Judge shall be attached to the petition.
    (b) Copies of the petition shall be served upon all parties to the 
proceeding and on the Chief Administrative Law Judge.

[54 FR 13330, Mar. 31, 1989]



Sec. 500.265  Implementation by the Secretary.

    (a) Whenever, on the Secretary's own motion or upon acceptance of a 
party's petition, the Secretary believes that a Decision and Order may 
warrant modifying or vacating, the Secretary shall issue a Notice of 
Intent to modify or vacate.
    (b) The Notice of Intent to Modify or Vacate a Decision and Order 
shall specify the issue or issues to be considered, the form in which 
submission shall be made (i.e., briefs, oral argument, etc.), and the 
time within which such presentation shall be submitted. The Secretary 
shall closely limit the time within which the briefs must be filed or 
oral presentations made, so as to avoid unreasonable delay.
    (c) The Notice of Intent shall be issued within thirty (30) days 
after the date of the Decision and Order in question.
    (d) Service of the Notice of Intent shall be made upon each party to 
the proceeding, and upon the Chief Administrative Law Judge, in person 
or by certified mail.

[54 FR 13330, Mar. 31, 1989]



Sec. 500.266  Responsibility of the Office of Administrative Law Judges.

    Upon receipt of the Secretary's Notice of Intent to Modify or Vacate 
a Decision and Order of an Administrative Law Judge, the Chief 
Administrative Law Judge shall, within fifteen (15) days, index, certify 
and forward a copy of the complete hearing record to the Secretary.

[48 FR 36741, Aug. 21, 1983. Redesignated at 54 FR 13330, Mar. 31, 1989]



Sec. 500.267  Filing and service.

    (a) Filing. All documents submitted to the Secretary shall be filed 
with the Secretary of Labor, U.S. Department of Labor, Washington, DC 
20210.
    (b) Number of copies. An original and two copies of all documents 
shall be filed.
    (c) Computation of time for delivery by mail. Documents are not 
deemed filed with the Secretary until actually received by that office. 
All documents, including documents filed by mail, must be received by 
the Secretary either on or before the due date.
    (d) Manner and proof of service. A copy of all documents filed with 
the Secretary shall be served upon all other parties involved in the 
proceeding. Service under this section shall be by personal delivery or 
by mail. Service by mail is deemed effected at the time of mailing to 
the last known address.

[54 FR 13330, Mar. 31, 1989]



Sec. 500.268  Final decision of the Secretary.

    (a) The Secretary's final Decision and Order shall be issued within 
120 days from the notice of intent granting the petition, except that in 
cases involving the review of an Administrative Law Judge decision in a 
certificate action as described in Sec. 500.224(b), the Secretary's 
final decision shall be issued within ninety (90) days from the date 
such notice. The Secretary's Decision and Order shall be served upon all 
parties and the Chief Administrative Law Judge, in person or by 
certified mail.
    (b) Upon receipt of an Order of the Secretary modifying or vacating 
the Decision and Order of an Administrative Law Judge, the Chief 
Administrative Law Judge shall substitute such

[[Page 53]]

Order for the Decision and Order of the Administrative Law Judge.

[54 FR 13330, Mar. 31, 1989, as amended at 61 FR 24866, May 16, 1996]



Sec. 500.269  Stay pending decision of the Secretary.

    (a) The filing of a petition seeking review by the Secretary of a 
Decision and Order of an Administrative Law Judge, pursuant to 
Sec. 500.264, does not stop the running of the thirty-day time limit in 
which respondent may file an appeal to obtain a review in the United 
States District Court of an administrative order, as provided in section 
103(b)(2) or section 503(b)(2) of the Act, unless the Secretary issues a 
Notice of Intent pursuant to Sec. 500.265.
    (b) In the event a respondent has filed a notice of appeal of the 
Administrative Law Judge's Decision and Order in a United States 
District Court and the Secretary issues a Notice of Intent, the 
Secretary will seek a stay of proceedings in the Court until such time 
as the Secretary issues the final decision, as provided in Sec. 500.268.
    (c) Where the Secretary has issued a Notice of Intent, the time for 
filing an appeal under sections 103(b)(2) or 503(b)(2) of the Act shall 
commence from the date of the issuance of the Secretary's final 
decision, as provided in Sec. 500.268.

[54 FR 13330, Mar. 31, 1989]

                                 Record



Sec. 500.270  Retention of official record.

    The official record of every completed administrative hearing 
provided by these regulations shall be maintained and filed under the 
custody and control of the Chief Administrative Law Judge.



Sec. 500.271  Certification of official record.

    Upon receipt of timely notice of appeal to a United States District 
Court pursuant to section 103(c) or 503(c) of the Act, the Chief 
Administrative Law Judge shall promptly certify and file with the 
appropriate United States District Court, a full, true, and correct copy 
of the entire record, including the transcript of proceedings.



PART 501--ENFORCEMENT OF CONTRACTUAL OBLIGATIONS FOR TEMPORARY ALIEN AGRICULTURAL 
WORKERS ADMITTED UNDER SECTION 216 OF THE IMMIGRATION AND NATIONALITY ACT--
Table of Contents




                      Subpart A--General Provisions

Sec.
501.0  Introduction.
501.1  Purpose and scope.
501.2  Coordination of intake between DOL agencies.
501.3  Discrimination prohibited.
501.4  Waiver of rights prohibited.
501.5  Investigation authority of Secretary.
501.6  Prohibition on interference with Department of Labor Officials.
501.7  Accuracy of information, statements, data.
501.10  Definitions.

                Subpart B--Enforcement of Work Contracts

501.15  Enforcement.
501.16  General.
501.17  Concurrent actions.
501.18  Representation of the Secretary.
501.19  Civil money penalty assessment.
501.20  Enforcement of Wage and Hour investigative authority.
501.21  Referral of findings to ETA.
501.22  Civil money penalties--payment and collection.

                  Subpart C--Administrative Proceedings

501.30  Applicability of procedures and rules.

                     Procedures Relating to Hearing

501.31  Written notice of determination required.
501.32  Contents of notice.
501.33  Request for hearing.

                            Rules of Practice

501.34  General.
501.35  Commencement of proceeding.
501.36  Caption of proceeding.

                          Referral for Hearing

501.37  Referral to Administrative Law Judge.
501.38  Notice of docketing.
501.39  Service upon attorneys for the Department of Labor--number of 
          copies.

               Procedures Before Administrative Law Judge

501.40  Consent findings and order.

[[Page 54]]

                         Post-Hearing Procedures

501.41  Decision and order of Administrative Law Judge.

              Review of Administrative Law Judge's Decision

501.42  Procedures for initiating and undertaking review.
501.43  Responsibility of the Office of Administrative Law Judges.
501.44  Additional information, if required.
501.45  Final decision of the Secretary.

                                 Record

501.46  Retention of official record.
501.47  Certification.

    Authority: 8 U.S.C. 1101(a)(15)(H)(ii)(a), 1184(c), and 1186.

    Source: 52 FR 20527, June 1, 1987, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 501.0  Introduction.

    These regulations cover the enforcement of all contractual 
obligations provisions applicable to the employment of H-2A workers 
under section 216 of the Immigration and Nationality Act (INA), as 
amended by the Immigration Reform and Control Act of 1986 (IRCA). These 
regulations are also applicable to the employment of other workers hired 
by employers of H-2A workers in the occupations and for the period of 
time set forth in the job order approved by ETA as a condition for 
granting H-2A certification, including any extension thereof. Such other 
workers hired by H-2A employers are hereafter referred to as engaged in 
corresponding employment.



Sec. 501.1  Purpose and scope.

    (a) Statutory standard. Section 216(a) of the INA provides that--

    (1) A petition to import an alien as an H-2A worker (as defined in 
subsection (i)(2) may not be approved by the Attorney General unless the 
petitioner has applied to the Secretary of Labor for a certification 
that--
    (A) There are not sufficient workers who are able, willing, and 
qualified, and who will be available at the time and place needed, to 
perform the labor or services involved in the petition, and
    (B) The employment of the alien in such labor or services will not 
adversely affect the wages and working conditions of workers in the 
United States similarly employed.

    (b) Role of the ETA, USES. The issuance and denial of labor 
certification under section 216 of the INA has been delegated by the 
Secretary of Labor to the Employment and Training Administration (ETA). 
In general, matters concerning the obligations of an employer of H-2A 
workers related to the labor certification process are administered and 
enforced by ETA. Included within ETA's jurisdiction are such issues as 
whether U.S. workers were available, whether positive recruitment was 
conducted, whether there was a strike or lockout, the methodology for 
establishing adverse effect wage rates, whether workers' compensation 
insurance was provided, whether employment was offered to U.S. workers 
for up to 50 percent of the contract period and other similar matters. 
The regulations pertaining to the issuance and denial of labor 
certification for temporary alien workers by the Employment and Training 
Administration are found in title 20 CFR part 655.
    (c) Role of ESA, Wage and Hour Division. Section 216(g)(2) of the 
INA provides that--

    [T]he Secretary of Labor is authorized to take such actions 
including imposing appropriate penalties and seeking appropriate 
injunctive relief and specific performance of contractual obligations, 
as may be necessary to assure employer compliance with terms and 
conditions of employment under this section.


Certain investigation, inspection and law enforcement functions to carry 
out the provisions of section 216 of the INA have been delegated by the 
Secretary of Labor to the Employment Standards Administration (ESA), 
Wage and Hour Division. In general, matters concerning the obligations 
of the work contract between an employer of H-2A workers and the H-2A 
workers and other workers in corresponding employment hired by H-2A 
employers are enforced by ESA. Included within the enforcement 
responsibility of ESA, Wage and Hour Division are such matters as the 
payment of required wages, transportation, meals and housing provided 
during the employment. The Wage and Hour Division has the responsibility 
to carry out investigations, inspections and law enforcement

[[Page 55]]

functions and in appropriate instances impose penalties, seek injunctive 
relief and specific performance of contractual obligations, including 
recovery of unpaid wages.
    (d) Effect of regulations. The amendments to the INA made by title 
III of the IRCA apply to petitions and applications filed on and after 
June 1, 1987. Accordingly, the enforcement functions carried out by the 
Wage and Hour Division under the INA and these regulations apply to the 
employment of any H-2A worker and any other workers hired by H-2A 
employers in corresponding employment as the result of any petition or 
application filed with the Department on and after June 1, 1987.



Sec. 501.2  Coordination of intake between DOL agencies.

    Complaints received by ETA, or any State Employment Service Agency 
regarding contractual H-2A labor standards between the employer and the 
employee will be immediately forwarded to the appropriate Wage and Hour 
office for appropriate action under these regulations.



Sec. 501.3  Discrimination prohibited.

    No person shall intimidate, threaten, restrain, coerce, blacklist, 
discharge, or in any manner discriminate against any person who has:
    (a) Filed a complaint under or related to section 216 of the INA or 
these regulations;
    (b) Instituted or caused to be instituted any proceedings related to 
section 216 of the INA or these regulations;
    (c) Testified or is about to testify in any proceeding under or 
related to section 216 of the INA or these regulations;
    (d) Exercised or asserted on behalf of himself or others any right 
or protection afforded by section 216 of the INA or these regulations.
    (e) Consulted with an employee of a legal assistance program or an 
attorney on matters related to section 216 of the INA (8 U.S.C. 1186), 
or to this subpart or any other DOL regulation promulgated pursuant to 
section 216 of the INA.

Allegations of discrimination in employment against any person will be 
investigated by Wage and Hour. Where Wage and Hour has determined 
through investigation that such allegations have been substantiated 
appropriate remedies may be sought. Wage and Hour may assess civil money 
penalties, seek injunctive relief, and/or seek additional remedies 
necessary to make the employee whole as a result of the discrimination, 
as appropriate, and may recommend to ETA that labor certification of any 
violator be denied in the future.



Sec. 501.4  Waiver of rights prohibited.

    No person shall seek to have an H-2A worker, or other worker 
employed in corresponding employment by an H-2A employer, waive rights 
conferred under section 216 of the INA or under these regulations. Such 
waiver is against public policy. Any agreement by an employee purporting 
to waive or modify any rights inuring to said person under the Act or 
these regulations shall be void as contrary to public policy, except 
that a waiver or modification of rights or obligations hereunder in 
favor of the Secretary shall be valid for purposes of enforcement of the 
provisions of the Act or these regulations. This does not prevent 
agreements to settle private litigation.



Sec. 501.5  Investigation authority of Secretary.

    (a) General. The Secretary, either pursuant to a complaint or 
otherwise, shall, as may be appropriate, investigate and, in connection 
therewith, enter and inspect such places and vehicles (including 
housing) and such records (and make transcriptions thereof), question 
such persons and gather such information as deemed necessary by the 
Secretary to determine compliance with contractual obligations under 
section 216 of the INA or these regulations.
    (b) Failure to permit investigation. Where any person using the 
services of an H-2A worker does not permit an investigation concerning 
the employment of his or her workers the Wage and Hour Division shall 
report such occurrence to ETA and may recommend denial of future labor 
certifications to

[[Page 56]]

such person. In addition, Wage and Hour may take such action as may be 
appropriate, including the seeking of an injunction or assessing civil 
money penalties, against any person who has failed to permit Wage and 
Hour to make an investigation.
    (c) Confidential investigation. The Secretary shall conduct 
investigations in a manner which protects the confidentiality of any 
complainant or other person who provides information to the Secretary in 
good faith.
    (d) Report of violations. Any person may report a violation of the 
work contract obligations of section 216 of the INA or these regulations 
to the Secretary by advising any local office of the Employment Service 
of the various States, any office of ETA, any office of the Wage and 
Hour Division, ESA, U.S. Department of Labor, or any other authorized 
representative of the Secretary. The office or person receiving such a 
report shall refer it to the appropriate office of the Wage and Hour 
Division, ESA, for the area in which the reported violation is alleged 
to have occurred.



Sec. 501.6  Prohibition on interference with Department of Labor officials.

    No person shall interfere with any official of the Department of 
Labor assigned to perform an investigation, inspection or law 
enforcement function pursuant to the INA and these regulations during 
the performance of such duties. Wage and Hour will seek such action as 
it deems appropriate, including an injunction to bar any such 
interference with an investigation and/or assess a civil money penalty 
therefor. In addition Wage and Hour may refer a report of the matter to 
ETA with a recommendation that the person's labor certification be 
denied in the future. (Federal statutes which prohibit persons from 
interfering with a Federal officer in the course of official duties are 
found at 18 U.S.C. 111 and 18 U.S.C. 1114.)



Sec. 501.7  Accuracy of information, statements, data.

    Information, statements and data submitted in compliance with 
provisions of the Act or these regulations are subject to title 18, 
section 1001, of the U.S. Code, which provides:

             Section 1001. Statements or entries generally.

    Whoever, in any matter within the jurisdiction of any department or 
agency of the United States knowingly and willfully falsifies, conceals 
or covers up by any trick, scheme, or device a material fact, or makes 
any false, fictitious or fraudulent statements or representations, or 
makes or uses any false writing or document knowing the same to contain 
any false, fictitious or fraudulent statement or entry, shall be fined 
not more than $10,000 or imprisoned not more than five years, or both.



Sec. 501.10  Definitions.

    The definitions in paragraphs (a) through (d) are set forth for 
purposes of this part. In addition, the definitions in paragraphs (e) 
through (v) are promulgated at 20 CFR 655.100(b), are utilized herein, 
and are incorporated and set forth for information purposes.
    (a) Act and INA mean the Immigration and Nationality Act, as amended 
(8 U.S.C. 1101 et seq.), with reference particularly to section 216.
    (b) Administrative Law Judge (ALJ) means a person within the 
Department of Labor Office of Administrative Law Judges appointed 
pursuant to 5 U.S.C. 3105.
    (c) Administrator means the Administrator of the Wage and Hour 
Division, Employment Standards Administration, U.S. Department of Labor, 
and such authorized representatives as may be designated to perform any 
of the functions of the Administrator under this part.
    (d) Work contract means all the material terms and conditions of 
employment relating to wages, hours, working conditions, and other 
benefits, including those terms and conditions required by the 
applicable regulations in subpart B of 20 CFR part 655, Labor 
Certification Process for Temporary Agricultural Employment in the 
United States, and those contained in the Application for Alien 
Employment Certification and job offer under that subpart, which 
contract between the employer and the worker may be in the form of a 
separate written document. In the absence of a separate written work 
contract incorporating the required terms and conditions of employment, 
entered into

[[Page 57]]

between the employer and the worker, the work contract at a minimum 
shall be the terms of the job order included in the application for 
temporary labor certification, and shall be enforced in accordance with 
these regulations.
    (e) Adverse effect wage rate (AEWR) means the wage rate which the 
Director has determined must be offered and paid, as a minimum, to every 
H-2A worker and every U.S. worker for a particular occupation and/or 
area in which an employer employs or seeks to employ an H-2A worker so 
that the wages of similarly employed U.S. workers will not be adversely 
affected.
    (f) Agricultural labor or services. Pursuant to section 
101(a)(15)(ii)(a) of the INA (8 U.S.C. 1101(a)(15)(H)(ii)(a)), 
``agricultural labor or services'' is defined for the purposes of this 
subpart as either ``agricultural labor'' as defined and applied in 
section 3121(g) of the Internal Revenue Code of 1954 (26 U.S.C. 3121(g)) 
or ``agriculture'' as defined and applied in section 3(f) of the Fair 
Labor Standards Act of 1938 (29 U.S.C. 203(f)). An occupation included 
in either statutory definition shall be ``agricultural labor or 
services'', notwithstanding the exclusion of that occupation from the 
other statutory definition. For informational purposes, the statutory 
provisions are quoted below.
    (1) Agricultural labor. Section 3121(g) of the Internal Revenue Code 
of 1954 (26 U.S.C. 3121(g)) quoted as follows, defines the term 
``agricultural labor'' to include all service performed:

    (1) On a farm, in the employ of any person, in connection with 
cultivating the soil, or in connection with raising or harvesting any 
agricultural or horticultural commodity, including the raising, 
shearing, feeding, caring for, training, and management of livestock, 
bees, poultry, and furbearing animals and wildlife;
    (2) Services performed in the employ of the owner or tenant or other 
operator of a farm, in connection with the operation, or maintenance of 
such farm and its tools and equipment, or in salvaging timber or 
clearing land of brush and other debris left by a hurricane, if the 
major part of such service is performed on a farm;
    (3) In connection with the production or harvesting of any commodity 
defined as an agricultural commodity in section 15(g) of the 
Agricultural Marketing Act, as amended (12 U.S.C. 1141j), or in 
connection with the ginning of cotton, or in connection with the 
operation or maintenance of ditches, canals, reservoirs, or waterways, 
not owned or operated for profit, used exclusively for supplying and 
storing water for farming purposes;
    (4)(A) In the employ of the operator of a farm in handling, 
planting, drying, packing, packaging, processing, freezing, grading, 
storing, or delivering to storage or to market or to a carrier for 
transportation to market, in its unmanufactured state, any agricultural 
or horticultural commodity; but only if such operator produced more than 
one-half of the commodity with respect to which such service is 
performed;
    (B) In the employ of a group of operators of farms (other than a 
cooperative organization) in the performance of service described in 
subparagraph (A), but only if such operators produced all of the 
commodity with respect to which such service is performed. For purposes 
of this subparagraph, any unincorporated group of operators shall be 
deemed a cooperative organization if the number of operators comprising 
such group is more than 20 at any time during the calendar quarter in 
which such service is performed;
    (C) The provisions of subparagraphs (A) and (B) shall not be deemed 
to be applicable with respect to service performed in connection with 
commercial canning or commercial freezing or in connection with any 
agricultural or horticultural commodity after its delivery to a terminal 
market for distribution for consumption; or
    (5) On a farm operated for profit if such service his not in the 
course of the employer's trade or business or is domestic service in a 
private home of the employer.

As used in this subsection, the term farm includes stock, dairy, 
poultry, fruit, fur-bearing animal, and truck farms, plantations, 
ranches, nurseries, ranges, greenhouses or other similar structures used 
primarily for the raising of agricultural or horticultural commodities, 
and orchards.

    (2) Agriculture. Section 203(f) of title 29, United States Code, 
(section 3(f) of the Fair Labor Standards Act of 1938), quoted as 
follows, defines agriculture to include:

    (f) * * * farming in all its branches and among other things 
includes the cultivation and tillage of the soil, dairying, the 
production, cultivation, growing, and harvesting of any agricultural or 
horticultural commodities (including commodities defined as agricultural 
commodities in section 15(g) of the Agricultural Marketing Act, as 
amended), the raising of livestock, bees, fur bearing animals, or 
poultry, and any practices (including any forestry or lumbering 
operations) performed by a farmer or on a farm as an incident to or in 
conjunction with such farming operations, including preparation

[[Page 58]]

for market, delivery to storage or to market or to carriers for 
transportation to market.

    (3) Agricultural commodity. Section 1141j(g) of title 12, United 
States Code, (section 15(g) of the Agricultural Marketing Act, as 
amended) quoted as follows, defines agricultural commodity to include:

    (g) * * * in addition to other agricultural commodities, crude gum 
(oleoresin) from a living tree, and the following products as processed 
by the original producer of the crude gum (oleoresin) from which 
derived: Gum spirits of turpentine, and gum rosin, as defined in section 
92 of title 7.

    (iv) Gum rosin. Section 92 of title 7, United States Code, quoted as 
follows, defines gum spirits of turpentine and gum rosin as--

    (c) Gum spirits of turpentine means spirits of turpentine made from 
gum (oleoresin) from a living tree.

                                * * * * *

    (g) Gum rosin means rosin remaining after the distillation of gum 
spirits of turpentine.
    (g) Of a temporary or seasonal nature--(1) On a seasonal or other 
temporary basis. For the purposes of this subpart of a temporary or 
seasonal nature means on a seasonal or other temporary basis, as defined 
in the Employment Standards Administration's Wage and Hour Division's 
regulation at 29 CFR 500.20 under the Migrant and Seasonal Agricultural 
Worker Protection Act (MSPA). For informational purposes Sec. 500.20 as 
it pertains to seasonal or temporary basis is quoted below.
    (2) MSPA definition. For information purposes, the definition of on 
a seasonal or other temporary basis, as set forth at Sec. 500.20 of this 
title, is provided below:

    On a seasonal or other temporary basis means:

                                * * * * *

    Labor is performed on a seasonal basis, where, ordinarily, the 
employment pertains to or is of the kind exclusively performed at 
certain seasons or periods of the year and which, from its nature, may 
not be continuous or carried on throughout the year. A worker who moves 
from one seasonal activity to another, while employed in agriculture or 
performing agricultural labor, is employed on a seasonal basis even 
though he may continue to be employed during a major portion of the 
year.

                                * * * * *

    A worker is employed on other temporary basis where he is employed 
for a limited time only or the performance is contemplated for a 
particular piece of work, usually of short duration. Generally, 
employment, which is contemplated to continue indefinitely, is not 
temporary.

                                * * * * *

    On a seasonal or other temporary basis does not include the 
employment of any foreman or other supervisory employee who is employed 
by a specific agricultural employer or agricultural association 
essentially on a year round basis.

                                * * * * *

    On a seasonal or other temporary basis does not include the 
employment of any worker who is living at his permanent place of 
residence, when that worker is employed by a specific agricultural 
employer or agricultural association on essentially a year round basis 
to perform a variety of tasks for his employer and is not primarily 
employed to do field work.

    (3) Temporary. For the purpose of this subpart, the definition of 
``temporary'' in paragraph (c)(2)(ii) of this section refers to any job 
opportunity covered by this subpart where the employer needs a worker 
for a position, either temporary or permanent, for a limited period of 
time, which shall be for less than one year, unless the original 
temporary alien agricultural labor certification is extended based on 
unforeseen circumstances, pursuant to Sec. 655.106(c)(3) of this title.
    (h) DOL means the U.S. Department of Labor.
    (i) Employer means a person, firm, corporation or other association 
or organization which suffers or permits a person to work and (1) which 
has a location within the United States to which U.S. workers may be 
referred for employment, and which proposes to employ workers at a place 
within the United States and (2) which has an employer relationship with 
respect to employees under this subpart as indicated by the fact that it 
may hire, pay, fire, supervise or otherwise control the

[[Page 59]]

work of any such employee. An association of employers shall be 
considered the sole employer if it alone has the indicia of an employer 
set forth in this definition. Such an association, however, shall be 
considered as a joint employer with an employer member if it shares with 
the employer member one or more of the definitional indicia.
    (j) Employment Service (ES) and Employment Service (ES) System mean, 
collectively, the USES, the State agencies, the local offices, and the 
ETA regional offices.
    (k) Employment Standards Administration means the agency within the 
Department of Labor (DOL), which includes the Wage and Hour Division, 
and which is charged with the carrying out certain functions of the 
Secretary under the INA.
    (l) Employment and Training Administration (ETA) means the agency 
within the Department of Labor (DOL) which includes the U.S. Employment 
Service (USES).
    (m) H-2A worker means any nonimmigrant alien admitted to the United 
States for agricultural labor or services of a temporary or seasonal 
nature under section 101(a)(15)(H)(ii)(a) of the INA (8 U.S.C. 
1101(a)(15)(H)(ii)(a)).
    (n) Immigration and Naturalization Service (INS) means the component 
of the U.S. Department of Justice which makes the determination under 
the INA on whether or not to grant visa petitions to employers seeking 
H-2A workers to perform temporary agricultural work in the United 
States.
    (o) Job offer means the offer made by an employer or potential 
employer of H-2A workers to both U.S. and H-2A workers describing all 
the material terms and conditions of employment, including those 
relating to wages, working conditions, and other benefits.
    (p) Secretary means the Secretary of Labor or the Secretary's 
designee.
    (q) State agency means the State employment service agency 
designated under section 4 of the Wagner-Peyser Act to cooperate with 
the USES in the operation of the ES System.
    (r) Solicitor of Labor means the Solicitor, U.S. Department of 
Labor, and includes employees of the Office of the Solicitor of Labor 
designated by the Solicitor to perform functions of the Solicitor under 
this subpart.
    (s) Temporary alien agricultural labor certification means the 
certification made by the Secretary of Labor with respect to an employer 
seeking to file with INS a visa petition to import an alien as an H-2A 
worker, pursuant to sections 101(a)(15)(H)(ii)(a), 214 (a) and (c), and 
216 of the INA that (1) there are not sufficient workers who are able, 
willing, and qualified, and who will be available at the time and place 
needed, to perform the agricultural labor or services involved in the 
petition, and (2) the employment of the alien in such agricultural labor 
or services will not adversely affect the wages and working conditions 
of workers in the United States similarly employed (8 U.S.C. 
1101(a)(15)(H)(ii)(a), 1184 (a) and (c), and 1186).
    (t) United States Employment Service (USES) means the agency of the 
U.S. Department of Labor, established under the Wagner-Peyser Act, which 
is charged with administering the national system of public employment 
offices and carrying out certain functions of the Secretary under the 
INA.
    (u) United States (U.S.) worker means any worker who, whether a U.S. 
national, a U.S. citizen, or an alien, is legally permitted to work in 
the job opportunity within the United States (as defined at section 
101(a)(38) of the INA (8 U.S.C. 1101(a)(38)).
    (v) Wages means all forms of cash remuneration to a worker by an 
employer in payment for personal services.



                Subpart B--Enforcement of Work Contracts



Sec. 501.15  Enforcement.

    The investigations, inspections and law enforcement functions to 
carry out the provisions of section 216 of the INA, as provided in these 
regulations for enforcement by the Wage and Hour Division, pertain to 
the employment of any H-2A worker and any other worker employed in 
corresponding employment by an H-2A employer. Such enforcement includes 
those work contract provisions as defined in Sec. 501.10(d). The work 
contract enforced includes the employment benefits which must be

[[Page 60]]

stated in the job offer, as prescribed in 20 CFR 655.102.



Sec. 501.16  General.

    Whenever the Secretary believes that the H-2A provisions of the INA 
or these regulations have been violated such action shall be taken and 
such proceedings instituted as deemed appropriate, including (but not 
limited to) the following:
    (a) Impose denial of labor certification against any person for a 
violation of the H-2A obligations of the INA or the regulations. ETA 
shall make all determinations regarding the issuance or denial of labor 
certification. ESA shall make all determinations regarding the 
enforcement functions listed in paragraphs (b) through (d) of this 
section.
    (b) Institute appropriate administrative proceedings, including the 
recovery of unpaid wages, the enforcement of any other contractual 
obligations and the assessment of a civil money penalty against any 
person for a violation of the H-2A work contract obligations of the Act 
or these regulations.
    (c) Petition any appropriate District Court of the United States for 
temporary or permanent injunctive relief, including the withholding of 
unpaid wages, to restrain violation of the H-2A provisions the Act or 
these regulations by any person;
    (d) Petition any appropriate District Court of the United States for 
specific performance of contractual obligations.



Sec. 501.17  Concurrent actions.

    The taking of any one of the actions referred to above shall not be 
a bar to the concurrent taking of any other action authorized by the H-
2A provisions of the Act and these regulations, or the regulations of 20 
CFR part 655.



Sec. 501.18  Representation of the Secretary.

    (a) Except as provided in section 518(a) of title 28, United States 
Code, relating to litigation before the Supreme Court, the Solicitor of 
Labor may appear for and represent the Secretary in any civil litigation 
brought under the Act.
    (b) The Solicitor of Labor, through the authorized representatives 
shall represent the Administrator and the Secretary in all 
administrative hearings under the H-2A provisions of the Act and these 
regulations.



Sec. 501.19  Civil money penalty assessment.

    (a) A civil money penalty may be assessed by the Administrator for 
each violation of the work contract or these regulations.
    (b) In determining the amount of penalty to be assessed for any 
violation of the work contract as provided in the H-2A provisions of the 
Act or these regulations the Administrator shall consider the type of 
violation committed and other relevant factors. The matters which may be 
considered include, but are not limited to, the following:
    (1) Previous history of violation, or violations of the H-2A 
provisions of the Act and these regulations;
    (2) The number of workers affected by the violation or violations;
    (3) The gravity of the violation or violations;
    (4) Efforts made in good faith to comply with the H-2A provisions of 
the Act and these regulations;
    (5) Explanation of person charged with the violation or violations;
    (6) Commitment to future compliance, taking into account the public 
health, interest or safety, and whether the person has previously 
violated the H-2A provisions of the Act;
    (7) The extent to which the violator achieved a financial gain due 
to the violation, or the potential financial loss or potential injury to 
the workers.
    (c) A civil money penalty for violation of the work contract will 
not exceed $1,000 for each violation committed against each worker. A 
civil money penalty for discrimination or interference with Wage and 
Hour investigative authority will not exceed $1,000 for each such act of 
discrimination or interference.



Sec. 501.20  Enforcement of Wage and Hour investigative authority.

    Sections 501.5 through 501.7 of this part prescribe the 
investigation authority conferred upon the Wage and

[[Page 61]]

Hour Division for the purpose of enforcing the contractual obligations. 
These sections indicate the actions which may be taken upon failure to 
permit or interference with an investigation. No person shall interfere 
with any employee of the Secretary who is exercising or attempting to 
exercise this investigative or enforcement authority. As stated in 
Secs. 501.5, 501.6 and in 501.19 of this part, a civil money penalty may 
be assessed for each failure to permit an investigation or interference 
therewith, and other appropriate relief may be sought. In addition Wage 
and Hour shall report each such occurrence to ETA and may recommend to 
ETA denial of future labor certifications. The taking of any one action 
shall not bar the taking of any additional action.



Sec. 501.21  Referral of findings to ETA.

    Where Wage-Hour finds violations Wage and Hour shall so notify the 
appropriate representative of ETA and shall forward appropriate 
information, including investigative information to such representative 
for review and consideration.



Sec. 501.22  Civil money penalties--payment and collection.

    Where the assessment is directed in a final order by the 
Administrator, by an Administrative Law Judge, or by the Secretary, the 
amount of the penalty is immediately due and payable to the U.S. 
Department of Labor. The person assessed such penalty shall remit 
promptly the amount thereof as finally determined, to the Administrator 
by certified check or by money order, made payable to the order of 
``Wage and Hour Division, Labor.'' The remittance shall be delivered or 
mailed to the Wage and Hour Division Regional Office for the area in 
which the violations occurred.



                  Subpart C--Administrative Proceedings



Sec. 501.30  Applicability of procedures and rules.

    The procedures and rules contained herein prescribe the 
administrative process which will be applied with respect to a 
determination to impose an assessment of civil money penalties and which 
may be applied to the enforcement of contractual obligations, including 
the collection of unpaid wages due as a result of any violation of the 
H-2A provisions of the Act or of these regulations. Except with respect 
to the imposition of civil money penalties, the Secretary may, in his 
discretion, seek enforcement action in Federal court without resort to 
any administrative proceedings.

                     Procedures Relating to Hearing



Sec. 501.31  Written notice of determination required.

    Whenever the Administrator determines to assess a civil money 
penalty or to proceed administratively to enforce contractual 
obligations, including the recovery of unpaid wages, the person against 
whom such action is taken shall be notified in writing of such 
determination.



Sec. 501.32  Contents of notice.

    The notice required by Sec. 501.31 shall:
    (a) Set forth the determination of the Administrator including the 
amount of any unpaid wages due or contractual obligations required and 
the amount of any civil money penalty assessment and the reason or 
reasons therefor.
    (b) Set forth the right to request a hearing on such determination.
    (c) Inform any affected person or persons that in the absence of a 
timely request for a hearing, the determination of the Administrator 
shall become final and unappealable.
    (d) Set forth the time and method for requesting a hearing, and the 
procedures relating thereto, as set forth in Sec. 501.33.



Sec. 501.33  Request for hearing.

    (a) Any person desiring to request an administrative hearing on a 
determination referred to in Sec. 501.32 shall make such request in 
writing to the Administrator of the Wage and Hour Division, Employment 
Standards Administration, U.S. Department of Labor, 200 Constitution 
Avenue, NW., Washington, DC 20210, no later than thirty (30) days after 
issuance of the notice referred to in Sec. 501.32.

[[Page 62]]

    (b) No particular form is prescribed for any request for hearing 
permitted by this part. However, any such request shall:
    (1) Be typewritten or legibly written;
    (2) Specify the issue or issues stated in the notice of 
determination giving rise to such request;
    (3) State the specific reason or reasons why the person requesting 
the hearing believes such determination is in error;
    (4) Be signed by the person making the request or by an authorized 
representative of such person; and
    (5) Include the address at which such person or authorized 
representative desires to receive further communications relating 
thereto.
    (c) The request for such hearing must be received by the 
Administrator at the above address, within the time set forth in 
paragraph (a) of this section. For the affected person's protection, if 
the request is by mail, it should be by certified mail.

                            Rules of Practice



Sec. 501.34  General.

    Except as specifically provided in these regulations, the ``Rules of 
Practice and Procedure for Administrative Hearings Before the Office of 
Administrative Law Judges'' established by the Secretary at 29 CFR part 
18 shall apply to administrative proceedings described in this part.



Sec. 501.35  Commencement of proceeding.

    Each administrative proceeding permitted under the Act and these 
regulations shall be commenced upon receipt of a timely request for 
hearing filed in accordance with Sec. 501.33.



Sec. 501.36  Caption of proceeding.

    (a) Each administrative proceeding instituted under the Act and 
these regulations shall be captioned in the name of the person 
requesting such hearing, and shall be styled as follows:

In the Matter of ----, Respondent.

    (b) For the purposes of such administrative proceedings the 
Administrator shall be identified as plaintiff and the person requesting 
such hearing shall be named as respondent.

                          Referral for Hearing



Sec. 501.37  Referral to Administrative Law Judge.

    (a) Upon receipt of a timely request for a hearing filed pursuant to 
and in accordance with Sec. 501.33 the Administrator, by the Associate 
Solicitor for the Division of Fair Labor Standards or by the Regional 
Solicitor for the Region in which the action arose, shall, by Order of 
Reference, promptly refer a copy of the notice of administrative 
determination complained of, and the original or a duplicate copy of the 
request for hearing signed by the person requesting such hearing or by 
the authorized representative of such person, to the Chief 
Administrative Law Judge, for a determination in an administrative 
proceeding as provided herein. The notice of administrative 
determination and request for hearing shall be filed of record in the 
Office of the Chief Administrative Law Judge and shall, respectively, be 
given the effect of a complaint and answer thereto for purposes of the 
administrative proceeding, subject to any amendment that may be 
permitted under these regulations or 29 CFR part 18.
    (b) A copy of the Order of Reference, together with a copy of these 
regulations, shall be served by counsel for the Administrator upon the 
person requesting the hearing, in the manner provided in 29 CFR 18.3.



Sec. 501.38  Notice of docketing.

    Upon receipt of an Order of Reference, the Chief Administrative Law 
Judge shall appoint an Administrative Law Judge to hear the case. The 
Administrative Law Judge shall promptly notify all interested parties of 
the docketing of the matter and shall set the time and place of the 
hearing. The date of the hearing shall be not more than 60 days from the 
date on which the Order of Reference was filed.



Sec. 501.39  Service upon attorneys for the Department of Labor--number 
of copies.

    Two copies of all pleadings and other documents required for any 
administrative proceeding provided herein shall be served on the 
attorneys for the Department of Labor. One copy shall

[[Page 63]]

be served on the Associate Solicitor, Division of Fair Labor Standards, 
Office of the Solicitor, U.S. Department of Labor, 200 Constitution 
Avenue, NW., Washington, DC 20210, and one copy on the Attorney 
representing the Department in the proceeding.

               Procedures Before Administrative Law Judge



Sec. 501.40  Consent findings and order.

    (a) General. At any time after the commencement of a proceeding 
under this part, but prior to the reception of evidence in any such 
proceeding, a party may move to defer the receipt of any evidence for a 
reasonable time to permit negotiation of an agreement containing consent 
findings and an order disposing of the whole or any part of the the 
proceeding. The allowance of such deferment and the duration thereof 
shall be at the discretion of the Administrative Law Judge, after 
consideration of the nature of the proceeding, the requirements of the 
public interest, the representations of the parties, and the probability 
of an agreement being reached which will result in a just disposition of 
the issues involved.
    (b) Content. Any agreement containing consent findings and an order 
disposing of a proceeding or any part thereof shall also provide:
    (1) That the order shall have the same force and effect as an order 
made after full hearing;
    (2) That the entire record on which any order may be based shall 
consist solely of the notice of administrative determination (or amended 
notice, if one is filed), and the agreement;
    (3) A waiver of any further procedural steps before the 
Administrative Law Judge; and
    (4) A waiver of any right to challenge or contest the validity of 
the findings and order entered into in accordance with the agreement.
    (c) Submission. On or before the expiration of the time granted for 
negotiations, the parties or their authorized representatives or their 
counsel may:
    (1) Submit the proposed agreement for consideration by the 
Administrative Law Judge; or
    (2) Inform the Administrative Law Judge that agreement cannot be 
reached.
    (d) Disposition. In the event an agreement containing consent 
findings and an order is submitted within the time allowed therefor, the 
Administrative Law Judge, within thirty (30) days thereafter, shall, if 
satisfied with its form and substance, accept such agreement by issuing 
a decision based upon the agreed findings.

                         Post-Hearing Procedures



Sec. 501.41  Decision and order of Administrative Law Judge.

    (a) The Administrative Law Judge shall prepare, within 60 days after 
completion of the hearing and closing of the record, a decision on the 
issues referred by the Administrator.
    (b) The decision of the Administrative Law Judge shall include a 
statement of findings and conclusions, with reasons and basis therefor, 
upon each material issue presented on the record. The decision shall 
also include an appropriate order which may affirm, deny, reverse, or 
modify, in whole or in part, the determination of the Administrator. The 
reason or reasons for such order shall be stated in the decision.
    (c) The decision shall be served on all parties and the Secretary in 
person or by certified mail. The decision when served by the 
Administrative Law Judge shall constitute the final order of the 
Administrator unless the Secretary, as provided for in Sec. 501.42 below 
determines to review the decision.

              Review of Administrative Law Judge's Decision



Sec. 501.42  Procedures for initiating and undertaking review.

    (a) A respondent, the Administrator or any other party wishing 
review of the decision of an Administrative Law Judge shall, within 30 
days of the decision of the Administrative Law Judge, petition the 
Secretary to review the decision. Copies of the petition shall be served 
on all parties and on the Administrative Law Judge. If the Secretary 
does not issue a notice accepting a petition for review within 30 days 
after receipt of a timely filing of the petition, or within 30 days of 
the date of

[[Page 64]]

the decision if no petition has been received, the decision of the 
Administrative Law Judge shall be deemed the final agency action.
    (b) Whenever the Secretary either on the Secretary's own motion or 
by acceptance of a party's petition, determines to review the decision 
of an Administrative Law Judge, a notice of the same shall be served 
upon the Administrative Law Judge and upon all parties to the proceeding 
in person or by certified mail.



Sec. 501.43  Responsibility of the Office of Administrative Law Judges.

    Upon receipt of the Secretary's Notice pursuant to Sec. 501.42 of 
these regulations, the Office of Administrative Law Judges shall, 
promptly forward a copy of the complete hearing record to the Secretary.



Sec. 501.44  Additional information, if required.

    Where the Secretary has determined to review such decision and 
order, the Secretary shall notify each party of:
    (a) The issue or issues raised;
    (b) The form in which submission shall be made (i.e., briefs, oral 
argument, etc.); and the time within which such presentation shall be 
submitted.



Sec. 501.45  Final decision of the Secretary.

    The Secretary's final decision shall be issued within 90 days from 
the notice granting the petition and served upon all parties and the 
administrative law judge, in person or by certified mail.

                                 Record



Sec. 501.46  Retention of official record.

    The official record of every completed administrative hearing 
provided by these regulations shall be maintained and filed under the 
custody and control of the Chief Administrative Law Judge.



Sec. 501.47  Certification.

    Upon receipt of a complaint seeking review of a decision issued 
pursuant to this part filed in a U.S. District Court, after the 
administrative remedies have been exhausted, the Chief Administrative 
Law Judge shall promptly index, certify and file with the appropriate 
U.S. District Court, a full, true, and correct copy of the entire 
record, including the transcript of proceedings.



PART 504--ATTESTATIONS BY FACILITIES USING NONIMMIGRANT ALIENS AS 
REGISTERED NURSES--Table of Contents




    Authority: 8 U.S.C. 1101(a)(15)(H)(i)(a) and 1182(m); sec. 3(c)(1), 
Pub. L. 101-238, 103 Stat. 2099, 2103; and sec. 341 (a) and (b), Pub. L. 
103-182, 107 Stat. 2057.

    Source: 61 FR 51014, Sept. 30, 1996, unless otherwise noted.



Sec. 504.1  Cross-reference.

    Regulations governing labor condition attestations by facilities 
using nonimmigrant aliens as registered nurses are found at 20 CFR part 
655, subparts D and E.



PART 505--LABOR STANDARDS ON PROJECTS OR PRODUCTIONS ASSISTED BY GRANTS 
FROM THE NATIONAL ENDOWMENTS FOR THE ARTS AND HUMANITIES--
Table of Contents




Sec.
505.1  Purpose and scope.
505.2  Definitions.
505.3  Prevailing minimum compensation.
505.4  Receipt of grant funds.
505.5  Adequate assurances.
505.6  Safety and health standards.
505.7  Failure to comply.

    Authority: Sec. 5(j), Pub. L. 89-209, 79 Stat. 848 (20 U.S.C. 
954(i)); sec. 7(g), Pub. L. 94-462, 90 Stat. 1971, as amended by sec. 
107(4), Pub. L. 99-194, 99 Stat. 1337 (20 U.S.C. 956(g)); Secretary's 
Order 9-83 (48 FR 35736) and Secretary's Order 6-84 (49 FR 32473).

    Source: 53 FR 23541, June 22, 1988, unless otherwise noted.



Sec. 505.1  Purpose and scope.

    (a) The regulations contained in this part set forth the procedures 
which are deemed necessary and appropriate to carry out the provisions 
of section 5(i) and section 7(g) of the National Foundation on the Arts 
and Humanities Act of 1965, as amended, 20 U.S.C. 954(i), 20 U.S.C. 
956(g). As a condition to the receipt of any grant, the grantees must

[[Page 65]]

give adequate assurances that all professional performers and related or 
supporting professional personnel employed on projects or productions 
assisted by grants from the National Endowment for the Arts and the 
National Endowment for the Humanities shall receive not less than the 
prevailing minimum compensation as determined by the Secretary of Labor.
    (b) Regulations and procedures relating to wages on construction 
projects as provided in section 5(j) and section 7(j) of the National 
Foundation on the Arts and Humanities Act of 1965, as amended, may be 
found in parts 3 and 5 of this title.
    (c) Standards of overtime compensation for laborers or mechanics may 
be found in the Contract Work Hours and Safety Standards Act, 76 Stat. 
357, 40 U.S.C. 327 et seq. and part 5 of this title.



Sec. 505.2  Definitions.

    (a) The term Act means the National Foundation on the Arts and the 
Humanities Act of 1965, as amended, 79 Stat 848, as amended, 20 U.S.C. 
951 et seq.
    (b) The term Secretary means the Secretary of Labor.
    (c) The term Administrator means the Administrator of the Wage and 
Hour Division, Employment Standards Administration, U.S. Department of 
Labor, or authorized representative, to whom is assigned the performance 
of functions of the Secretary pertaining to wages under the National 
Foundation on the Arts and the Humanities Act of 1965, as amended.
    (d) The term Assistant Secretary means the Assistant Secretary for 
Occupational Safety and Health, U.S. Department of Labor, or authorized 
representative, to whom is assigned the performance of functions of the 
Secretary pertaining to safety and health under the National Foundation 
on the Arts and the Humanities Act of 1965, as amended.
    (e) Professional in the phrase professional performer and related or 
supporting professional personnel shall include all those who work for 
compensation on a project or production which is assisted by a grant 
from the National Endowment for the Arts or the National Endowment for 
the Humanities regardless of whether paid out of grant funds. It shall 
not include those whose status is amateur because their engagement for 
performance or supporting work contemplates no compensation. 
Compensation does not include reimbursement of expenses (i.e., meals, 
costumes, make-up etc.). The words related or supporting . . . personnel 
in the same phrase shall include all those whose work is related to the 
particular project or production such as musicians, stage hands, scenery 
designers, technicians, electricians and moving picture machine 
operators, as distinguished from those who operate a place for receiving 
an audience without reference to the particular project or production 
being exhibited, such as ushers, janitors, and those who sell and 
collect tickets. The phrase does not include laborers and mechanics 
employed by contractors or subcontractors on construction projects, 
whose compensation is regulated under section 5(j) and section 7(j) of 
the Act. The phrase professional performers and related or supporting 
professional personnel shall not include persons employed as regular 
faculty or staff of an educational institution primarily performing 
duties commonly associated with the teaching profession. It shall 
include persons employed by educational institutions primarily to engage 
in activities customarily performed by performing artists or by those 
who assist in the presentation of performances assisted by grants from 
the National Endowment for the Arts or the National Endowment for the 
Humanities.



Sec. 505.3  Prevailing minimum compensation.

    (a)(1) In the absence of an alternative determination made by the 
Administrator under paragraph (b) of this section, and except as 
provided in paragraph (a)(2) of this section, the prevailing minimum 
compensation required to be paid under the Act to the various 
professional performers and related or supporting professional personnel 
employed on projects or productions assisted by grants from the National 
Endowment for the Arts and the

[[Page 66]]

National Endowment for the Humanities shall be the compensation 
(including fringe benefits) contained in collective bargaining 
agreements negotiated by the following national or international labor 
organizations or their local affiliates:

Actors' Equity Association.
Screen Actors Guild, Inc.
Screen Extras Guild, Inc.
American Guild of Musical Artists, Inc.
International Alliance of Theatrical Stage Employees and Moving Picture 
Machine Operators.
American Federation of Musicians.
National Association of Broadcast Employees and Technicians.
American Federation of Television and Radio Artists.
International Brotherhood of Electrical Workers.
American Guild of Variety Artists.
Writers Guild.

    (2) Professional performers and related or supporting professional 
personnel who are to perform activities which do not come within the 
jurisdiction of any collective bargaining agreement negotiated by the 
labor organizations named in paragraph (a)(1) of this section shall be 
paid minimum compensation as determined by agreement of the grant 
applicant or grantee and the personnel who will perform such activities 
or their representatives. Evidence of the agreement reached by the 
parties shall be submitted by the grant applicant to the grant agency, 
together with evidence of the prevailing minimum compensation for 
similar activities. If the parties do not agree on the minimum 
compensation to be paid to such personnel, the matter shall be referred 
to the Administrator of the Wage and Hour Division for final 
determination.
    (b)(1) Interested parties, including grant applicants, grantees, 
professional performers or related or supporting professional personnel 
and their representatives, may at any time submit to the Administrator a 
request for a determination of prevailing minimum compensation. The 
Administrator will make a determination concerning each such request in 
accordance with paragraph (b)(4) of this section.
    (2) Any request for a determination of prevailing minimum 
compensation shall include or be accompanied by information as to the 
locality or localities, the class or classes of professional performers 
or related or supporting professional personnel for the project or 
production in question, the names and addresses (to the extent known) of 
interested parties, and all available information relating to prevailing 
minimum compensation currently being paid to such persons or to persons 
employed in similar activities. No particular form is prescribed for 
submission of information under this section.
    (3) If the information specified in paragraph (b)(2) of this section 
is not submitted with a request for an alternative determination of 
prevailing minimum compensation or is insufficient to permit a 
determination, the Administrator may deny the request or request 
additional information, at the Administrator's discretion. Pertinent 
information from any source may be considered by the Administrator in 
connection with any request.
    (4) The Administrator will respond to a request for determination 
under this section within 30 days of receipt, by issuing a determination 
of alternative prevailing minimum compensation or denying the request or 
advising that additional time is necessary for a decision. If the 
Administrator determines from a preponderance of all relevant evidence 
obtained in connection with the request that the compensation provided 
for in the agreements negotiated by the labor organizations set forth in 
paragraph (a) of this section does not prevail for any professional 
performer or related or supporting professional personnel employed on 
similar activities in the locality, the Administrator will issue a 
determination of the prevailing minimum compensation required to be paid 
under the Act to such persons. If the Administrator finds that the 
compensation provided for in the agreements negotiated by the labor 
organizations set forth in paragraph (a) of this section does prevail 
for the professional performers or related or supporting professional 
personnel in question, the requesting party will be so notified.

[[Page 67]]

    (c) All professional performers and related or supporting 
professional personnel (other than laborers or mechanics with respect to 
whom labor standards are prescribed in section 5(j) and 7(j) of the Act) 
employed on projects or productions which are financed in whole or in 
part under section 5 or section 7 of the Act will be paid, without 
subsequent deduction or rebate on any account, not less than the 
prevailing minimum compensation determined in accordance with paragraph 
(a) of this section, unless an alternative determination is made under 
paragraph (b) of this section. Pending the decision of the Administrator 
on a request for determination under paragraph (b) of this section, the 
grantee may be required to set aside in a separate escrow account 
sufficient funds to satisfy the difference between the compensation 
(including fringe benefits) actually paid to the employee(s) in 
question, and the compensation (including fringe benefits) required 
under the applicable collective bargaining agreement negotiated by the 
labor organization named in paragraph (a) of this section, or furnish a 
bond with a surety or sureties satisfactory to the Administrator for the 
protection of the compensation of the affected employees.



Sec. 505.4  Receipt of grant funds.

    (a) The grantee shall not receive funds authorized by section 5 or 
section 7 of the Act until adequate initial assurances have been filed 
with the Chairperson of the National Endowment for the Arts or the 
Chairperson of the National Endowment for the Humanities, pursuant to 
sections 5(i) (1) and (2) and sections 7(g) (1) and (2) of the Act as 
provided in Sec. 505.5(a), that all professional performers and related 
or supporting professional personnel will be paid not less than the 
prevailing minimum compensation and that the safety and health 
requirements will be complied with. Neither shall the grantee receive 
any such funds if and after the Chairperson of the National Endowment 
for the Arts or Chairperson of the National Endowment for the Humanities 
is advised by the Secretary that continuing assurances as provided in 
Sec. 505.5(b) are inadequate or that labor standards contemplated by 
sections 5(i) (1) and (2) or sections 7(g) (1) and (2) of the Act have 
not been observed.
    (b) In order to facilitate such assurances so that the grantee may 
receive the grant funds promptly, the Chairpersons of the National 
Endowment for the Arts and the National Endowment for the Humanities 
will transmit with the grant letter, to each grantee of a grant that 
will provide assistance to projects or productions employing 
professional performers or related or supporting professional personnel 
under section 5 or section 7 of the Act, a copy of these regulations 
together with two copies of the assurance form (Form No. ESA-38). The 
Chairperson will advise the grantee that before the grant may be 
received, the grantee must give assurances that all professional 
performers and related or supporting professional personnel (other than 
laborers or mechanics with respect to whom labor standards are 
prescribed in section 5(j) and section 7(j) of the Act), will be paid, 
without subsequent deduction or rebate on any account not less than the 
minimum compensation determined in accordance with Sec. 505.3 (a) or (b) 
and that the safety and health requirements under Sec. 505.6 will be 
met. The Chairpersons will maintain on file in Washington, DC, for a 
period of three (3) years and make available upon request of the 
Secretary the original signed Form ESA-38 and a copy of the grant letter 
together with any supplementary documents needed to give a description 
of the project or production to be financed in whole or in part under 
the grant.



Sec. 505.5  Adequate assurances.

    (a) Initial assurances. The grantee shall give adequate initial 
assurances that not less than the prevailing minimum compensation 
determined in accordance with Sec. 505.3 will be paid to all 
professional performers and related or supporting professional 
personnel, and that no part of the project or production will be 
performed under working conditions which are unsanitary or hazardous or 
dangerous to the health and safety of the employees, by executing and 
filing with the Chairperson of the National Endowment for the Arts or 
the Chairperson of the National

[[Page 68]]

Endowment for the Humanities, as appropriate, Form ESA-38.
    (b) Continuing assurances. (1) The grantee shall maintain and 
preserve sufficient records as an assurance of compliance with section 
5(i) (1) and (2) and section 7(g) (1) and (2) of the Act and shall make 
such reports therefrom to the Secretary as necessary or appropriate to 
assure the adequacy of the assurances given. Such records shall be kept 
for a period of three (3) years after the end of the grant period to 
which they pertain. These records shall include the following 
information relating to each performer and related or supporting 
professional personnel to whom a prevailing minimum compensation 
determination applies pursuant to Sec. 505.3. In addition the record 
required in paragraph (b)(1)(vii) of this section shall be kept for all 
employees engaged in the project or production assisted by the grant.
    (i) Name.
    (ii) Home address.
    (iii) Occupation.
    (iv) Basic unit of compensation (such as the amount of a weekly or 
monthly salary, talent or performance fee, hourly rate or other basis on 
which compensation is computed), including fringe benefits or amounts 
paid in lieu thereof.
    (v) Work performed for each pay period expressed in terms of the 
total units of compensation fully and partially completed.
    (vi) Total compensation paid each pay period, deductions made, and 
date of payment, including amounts paid for fringe benefits and the 
person to whom they were paid, and
    (vii) Brief description of any injury incurred while performing 
under the grant and the dates and duration of disability.
    (2) The grantee shall permit the Administrator and the Assistant 
Secretary or their representatives to investigate and gather data 
regarding the wages, hours, safety, health, and other conditions and 
practices of employment related to the project or production, and to 
enter and inspect such project or production and such records (and make 
such transcriptions thereof), interview such employees during normal 
working hours, and investigate such facts, conditions, practices, or 
matters as may be deemed necessary or appropriate to determine whether 
the grantee has violated the labor standards contemplated by section 
5(i) and section 7(g) of the Act.
    (c) Determination of adequacy. The Administrator and Assistant 
Secretary shall determine the adequacy of assurances given pursuant to 
paragraphs (a) and (b) of this section within each of their respective 
areas of responsibilities, and may revise any such determination at any 
time.

(The requirements in paragraph (b) were approved by the Office of 
Management and Budget under control number 1215-0017)

[53 FR 23541, June 22, 1988; 53 FR 24171, June 27, 1988]



Sec. 505.6  Safety and health standards.

    (a) Standards. Section 5(i)(2) and section 7(g)(2) of the Act 
provide that ``no part of any project or production which is financed in 
whole or in part under this section will be performed or engaged in 
under working conditions which are unsanitary or hazardous or dangerous 
to the health and safety of the employees engaged in such project or 
production. Compliance with the safety and sanitary laws in the State in 
which the performance or part thereof is to take place shall be prima 
facie evidence of compliance. * * *'' The applicable safety and health 
standards shall be those set forth in 29 CFR parts 1910 and 1926, 
including matters incorporated by reference therein. Evidence of 
compliance with State laws relating to health and sanitation will be 
considered prime facie evidence of compliance with the safety and health 
requirements of the Act, and it shall be sufficient unless rebutted or 
overcome by a preponderance of evidence of a failure to comply with any 
applicable safety and health standards set forth in 29 CFR parts 1910 
and 1926, including matters incorporated by reference therein.
    (b) Variances. (1) Variances from standards applied under paragraph 
(a) of this section may be granted under the same circumstances in which 
variances may be granted under section 6(b)(6)(A) or 6(d) of the 
Williams-Steiger Occupational Safety and Health Act of 1970 (29 U.S.C. 
655). The

[[Page 69]]

procedures for the granting of variances and for related relief are 
those published in part 1905 of this title.
    (2) Any requests for variances shall also be considered requests for 
variances under the Williams-Steiger Occupational Safety and Health Act 
of 1970, and any variance from a standard applied under paragraph (a) of 
this section and in part 1910 of this title shall be deemed a variance 
from the standards under both the National Foundation on the Arts and 
Humanities Act of 1965 and the Williams-Steiger Occupational Safety and 
Health Act of 1970.



Sec. 505.7  Failure to comply.

    The Secretary's representatives shall maintain a list of those 
grantees who are considered to be responsible for instances of failure 
to comply with the obligation of the grantees specified in section 5(i) 
(1) and (2) and section 7(g) (1) and (2) of the Act, which are 
considered to have been willful or of such nature as to cast doubt on 
the reliability of formal assurances subsequently given and there shall 
be maintained a similar list where adjustment of the violations 
satisfactory to the Secretary was not properly made. Assurances from 
persons or organizations placed on either such list or any organization 
in which they have a substantial interest shall be considered inadequate 
for purposes of receiving further grants for a period not to exceed 
three (3) years from the date of notification by the Secretary that they 
have been placed on the lists unless, by appropriate application to the 
Secretary, they demonstrate a current responsibility to comply with 
section 5(i) (1) and (2) and section 7(g) (1) and (2) of the Act, and 
demonstrate that correction of the violations has been made.



PART 506--ATTESTATIONS BY EMPLOYERS USING ALIEN CREWMEMBERS FOR LONGSHORE 
ACTIVITIES IN U.S. PORTS--Table of Contents




    Authority: 8 U.S.C. 1288 (c) and (d).

    Source: 61 FR 51014, Sept. 30, 1996, unless otherwise noted.



Sec. 506.1  Cross-reference.

    Regulations governing attestations by employers using alien 
crewmembers for longshore activities in U.S. ports are found at 20 CFR 
part 655, subparts F and G.



PART 507--LABOR CONDITION APPLICATIONS AND REQUIREMENTS FOR EMPLOYERS USING 
NONIMMIGRANTS ON H-1B SPECIALTY VISAS IN SPECIALTY OCCUPATIONS AND AS FASHION 
MODELS--Table of Contents




    Authority: 8 U.S.C. 1101(a)(15)(H)(i)(b), 1182(n), and 1184; 29 
U.S.C. 49 et seq.; Pub. L. 102-232, 105 Stat. 1733, 1748 (8 U.S.C. 1182 
note); and sec. 341 (a) and (b), Pub. L. 103-182, 107 Stat. 2057.

    Source: 61 FR 51014, Sept. 30, 1996, unless otherwise noted.



Sec. 507.1  Cross-reference.

    Regulations governing labor condition applications requirements for 
employers using nonimmigrants on H-1B specialty visas in specialty 
occupations and as fashion models are found at 20 CFR part 655, subparts 
H and I.

[[Page 70]]



PART 508--ATTESTATIONS FILED BY EMPLOYERS UTILIZING F-1 STUDENTS FOR 
OFF-CAMPUS WORK--Table of Contents




    Authority: 29 U.S.C. 49 et seq.; and sec. 221(a), Pub. L. 101-649, 
104 Stat. 4978, 5027 (8 U.S.C. 1184 note).

    Source: 61 FR 51014, Sept. 30, 1996, unless otherwise noted.



Sec. 508.1  Cross-reference.

    Regulations governing attestations by employers using F-1 students 
in off-campus work are found at 20 CFR part 655, subparts J and K.



PART 510--IMPLEMENTATION OF THE MINIMUM WAGE PROVISIONS OF THE 1989 AMENDMENTS 
TO THE FAIR LABOR STANDARDS ACT IN PUERTO RICO--Table of Contents




                           Subpart A--General

Sec.
510.1  Summary.
510.2  Purpose and scope of regulations.
510.3  Definitions.

   Subpart B--Schedule of Minimum Wage Rates Applicable in Puerto Rico

510.10  Table of Wage Rates and Effective dates.

                 Subpart C--Classification of Industries

510.20  Wage surveys in Puerto Rico.
510.21  SIC codes.
510.22  Industries eligible for minimum wage phase-in.
510.23  Agricultural activities eligible for minimum wage phase-in.
510.24  Governmental entities eligible for minimum wage phase-in.
510.25  Traditional functions of government.

Appendix A to Part 510--Manufacturing Industries Eligible for Minimum 
          Wage Phase-in
Appendix B to Part 510--Nonmanufacturing Industries Eligible for Minimum 
          Wage Phase-in
Appendix C to Part 510--Government Corporations Eligible for Minimum 
          Wage Phase-in
Appendix D to Part 510--Municipalities Eligible for Minimum Wage Phase-
          in

    Authority: Sec. 4, Pub. L. 101-157, 103 Stat. 938; 29 U.S.C. 201 et 
seq.

    Source: 55 FR 12120, Mar. 30, 1990, unless otherwise noted.



                           Subpart A--General



Sec. 510.1  Summary.

    (a) The Fair Labor Standards Amendments of 1989 (Pub. L. 101-157) 
were enacted into law on November 17, 1989. Among other provisions, 
these amendments to the Fair Labor Standards Act (FLSA) increased the 
minimum wage in section 6(a)(1) of the Act to $3.80 an hour effective 
April 1, 1990, and to $4.25 an hour effective April 1, 1991. With 
respect to certain industries and governmental entities in the 
Commonwealth of Puerto Rico, the Amendments provided that these 
increases would be phased in over extended periods of time.
    (b) Section 6(c) of the FLSA provides for four separate categories 
or tiers for implementing the minimum wage rate increases in Puerto 
Rico.
    (1) For Tier 1, which includes employees of the United States, 
employees of hotels, motels, or restaurants, retail or service 
establishments that employ such employees primarily in connection with 
the preparation or offering of food or beverages for human consumption, 
and industries in which the average hourly wage is greater than $4.64, 
there shall be no phase-in. The wage rates and effective dates shall be 
those specified in section 6(a)(1) of FLSA, i.e., $3.80 per hour 
beginning April 1, 1990 and $4.25 per hour beginning April 1, 1991.
    (2) For Tier 2, which includes industries in which the average 
hourly wage is not less than $4.00 but not more than $4.64, the 
increases in the minimum wage rates shall be phased-in in five annual 
increments (rounded to the nearest 5 cents) beginning April 1, 1990, and 
ending April 1, 1994.
    (3) For Tier 3, which includes industries in which the average 
hourly wage is less than $4.00, the increases in the minimum wage shall 
be phased-in in six annual increments (rounded to the nearest 5 cents) 
beginning April 1, 1990, and ending April 1, 1995.
    (4) For Tier 4, which includes certain employees of the Commonwealth 
of Puerto Rico, municipalities, and other

[[Page 71]]

governmental entities of the Commonwealth in which the average hourly 
wage is less than $4.00, the increases shall be phased-in in seven 
annual increments (rounded to the nearest 5 cents) beginning April 1, 
1990 and ending April 1, 1996.
    (c) The Amendments also eliminated reference to Puerto Rico in those 
sections of FLSA relating to the establishment and conduct of special 
industry committees which recommend minimum wage rates in certain 
territories. These sections now apply only to American Samoa. (Industry 
committee regulations pertaining to American Samoa are found in 29 CFR 
parts 511 and 697).



Sec. 510.2  Purpose and scope of regulations.

    (a) The purpose of these regulations is to implement the 1989 
Amendments to the FLSA with respect to minimum wage increases in Puerto 
Rico. These regulations establish the applicable wage rates and 
effective dates in the four statutory tiers and categorize industries 
and governmental entities in Puerto Rico in those tiers according to 
average hourly wage rates. In addition, these regulations explain the 
methodology used to determine appropriate tiers, including the use of 
standard industrial classification (SIC) codes to categorize industries.
    (b) Subpart A of this part summarizes the provisions of the 
Amendments as applicable to Puerto Rico and defines the terms used 
herein. Subpart B of this part states the specific minimum wage rates 
for each tier and the effective dates of those rates. Subpart C of this 
part explains how industry and governmental categories were determined, 
the general methodology used to conduct the surveys which provided the 
data used to determine average hourly wage rates, and special issues in 
the classification of governmental entities. Appendix A of this part 
contains a listing of manufacturing industries by Standard Industrial 
Classification (SIC) code and indicates the tier to which each industry 
is subject. Appendix B of this part contains a listing of 
nonmanufacturing industries by SIC code and indicates the tier to which 
each industry is subject. Appendix C of this part contains a listing of 
government corporations and indicates the tier to which each such 
corporation is subject. Appendix D of this part contains a listing of 
municipalities and indicates the tier to which each municipality is 
subject.
    (c) Nothing contained in this part should be construed as precluding 
the Puerto Rico Minimum Wage Board, which has been granted authority to 
promulgate minimum wage rates above the Federal statutory minimum, from 
providing for increases in any industry which would exceed the rates 
provided for in these regulations or in section 6(a)(1) of the Act.



Sec. 510.3  Definitions.

    (a) Act or FLSA means the Fair Labor Standards Act of 1938, as 
amended (29 U.S.C. 201, et seq.).
    (b) Amendments or 1989 Amendments means the Fair Labor Standards 
Amendments of 1989 (Pub. L. 101-157).
    (c) Secretary means the Secretary of Labor, or a duly authorized 
representative of the Secretary.
    (d) Administrator means the Administrator of the Wage and Hour 
Division of the Employment Standards Administration, U.S. Department of 
Labor, or a duly authorized representative of the Administrator.
    (e) Department means the U.S. Department of Labor.
    (f) Tier means one of the four categories established for an 
extended phase-in of the statutory increases in the minimum wage under 
section 6(c) of the Act as amended.
    (g) Standard Industrial Classification (SIC) refers to the 
classifications established in the Standard Industrial Classification 
Manual, 1987, published by the Office of Management and Budget, 
Executive Office of the President.



   Subpart B--Schedule of Minimum Wage Rates Applicable in Puerto Rico



Sec. 510.10  Table of wage rates and effective dates.

    (a) The following table provides effective dates of minimum wage 
increases for the four statutory tiers. Appendices A and B to these 
regulations contain listings of manufacturing and non-

[[Page 72]]

manufacturing industries in Puerto Rico by SIC code, and indicate which 
tier is applicable. Appendices C and D contain listings of government 
corporations and municipalities and indicate which tier is applicable.

                                                 Effective Dates
----------------------------------------------------------------------------------------------------------------
                Tier                   4/1/90     4/1/91     4/1/92     4/1/93     4/1/94     4/1/95     4/1/96
----------------------------------------------------------------------------------------------------------------
One................................      $3.80      $4.25      $4.25      $4.25      $4.25      $4.25      $4.25
Two................................       3.55       3.70       3.90       4.05       4.25       4.25       4.25
Three..............................       3.50       3.65       3.80       3.95       4.10       4.25       4.25
Four...............................       3.50       3.60       3.75       3.85       4.00       4.10       4.25
----------------------------------------------------------------------------------------------------------------

    (b) Tier 1 applies to employees of the United States, employees of 
hotels, motels, or restaurants, retail or service establishments that 
employ such employees primarily in connection with the preparation or 
offering of food or beverages for human consumption, and industries in 
which the average hourly wage is greater than $4.64.
    (c) Tier 2 applies to industries in which the average hourly wage is 
not less than $4.00 but not more than $4.64.
    (d) Tier 3 applies to industries in which the average hourly wage is 
less than $4.00.
    (e) Tier 4 applies to certain employees of the Commonwealth of 
Puerto Rico, municipalities, and other governmental entities of the 
Commonwealth in which the average hourly wage is less than $4.00.



                 Subpart C--Classification of Industries



Sec. 510.20  Wage surveys in Puerto Rico.

    (a) The legislative history to the 1989 Amendments (Conference 
Report 101-47 on H.R. 2, May 8, 1989) stated that for any industry to 
qualify for an extended minimum wage phase-in, the government of Puerto 
Rico would be required to furnish official survey data substantiating 
that an industry's average hourly wage is below either the $4.65 or 
$4.00 threshold level. Such data were to be compiled and submitted for 
review to the Department.
    (b) Manufacturing industries. For purposes of implementing section 
6(c) of the Act, as amended, Puerto Rico has submitted its Census of 
Manufacturing Industries. The Bureau of Labor Statistics of Puerto Rico 
regularly gathers data from manufacturing establishments regarding 
employment, hours and earnings. The data include hourly earnings for 
production and related workers and are generally specific to the four-
digit SIC code level.
    (c) Non-manufacturing industries. The Bureau of Labor Statistics of 
Puerto Rico designed and executed a survey to supplement data regularly 
gathered for the U.S. Bureau of Labor Statistics (i.e., that included in 
the payroll establishment survey published in Employment and Earnings). 
The supplemental survey was carried out to determine average hourly 
earnings for production workers or non-supervisory employees in the 
private non-agricultural, non-manufacturing sector. Employment and 
payroll information was collected for the payroll period which included 
April 12, 1989. The data provided to the Department were generally 
specific to the four-digit SIC code level.
    (d) Agriculture. At the request of the Department, the Bureau of 
Labor Statistics of Puerto Rico conducted a survey of wages paid to 
agricultural workers which included employment and earnings from at 
least a specified number of sugarcane farms, coffee farms, ornamental 
farms, vegetable farms, and other farms, following standard statistical 
random sampling techniques. The survey included information on earnings, 
employment, and hourly wage rates paid to workers for the workweek 
including March 11 through March 17, 1990. In addition, applicable 
collective bargaining agreements were reviewed for sugarcane farms.
    (e) Commonwealth government. In the case of the Commonwealth 
Government of Puerto Rico, a census of hourly earnings was undertaken of 
all government departments, commissions and other agencies. A separate 
survey

[[Page 73]]

was conducted of government corporations. Managers, officials and 
employees in positions which require a college degree were excluded from 
the surveys.
    (f) Municipalities. In the case of the municipalities of Puerto 
Rico, a census of hourly earnings was conducted. Managers, officials and 
employees in positions which require a college degree were excluded from 
the survey.

[55 FR 12120, Mar. 30, 1990, as amended at 55 FR 53247, Dec. 27, 1990]



Sec. 510.21  SIC codes.

    (a) The Conference Report specifically cites Puerto Rico's annual 
Census of Manufacturing Industries as a source of average hourly wage 
data by industry. Industries in that census are organized by Standard 
Industrial Classification (SIC), the statistical classification system 
used for a variety of governmental and statistical purposes. With 
respect to non-manufacturing industries, or other industries not 
included in the Census of Manufacturing, the Conference Report stated 
that data ``should be at a level of specificity comparable to the four 
digit Standard Industry Code (SIC) code level.''
    (b) The Standard Industrial Classification (SIC) codes listed in 
appendix A and B herein are designated in accordance with the Standard 
Industrial Classification (SIC) Manual, 1987, published by the Executive 
Office of the President, Office of Management and Budget. This 
incorporation by reference was approved by the Director of the Federal 
Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies 
may be obtained from the National Technical Information Service, 5285 
Port Royal Road, Springfield, VA 22161. Copies may be inspected at all 
federal depository libraries in the Commonwealth of Puerto Rico; at the 
district office of the Wage and Hour Division, U.S. Department of Labor, 
New San Juan Office Building, 159 Chardon St., room 102, Hato Rey, PR 
00918; at the Commonwealth of Puerto Rico Department of Labor and Human 
Resources, Prudencio Rivera Building, Munoz Rivera Avenue 505, Mato Rey, 
PR 00918; or at the Office of the Federal Register, 800 North Capitol 
Street, NW., suite 700, Washington, DC. Establishments are classified 
according to their primary activity. The classification structure 
classifies industries by:
    (1) Two-digit major group,
    (2) Three digit industry group, or
    (3) Four-digit industry code, according to the level of industrial 
detail which may be required.

Each operating establishment is assigned an industry code on the basis 
of its primary activity, which is determined by its principal product or 
group of products produced or distributed, or services rendered.

[55 FR 12120, Mar. 30, 1990; 55 FR 12778, Apr. 5, 1990]



Sec. 510.22  Industries eligible for minimum wage phase-in.

    (a) Appendix A contains a listing of all industries included in the 
Census of Manufacturing. Appendix B contains a listing of non-
manufacturing industries. These listing are organized by SIC numbers, 
presented by:
    (1) Major group (two-digit classification),
    (2) Industry group (three-digit classification), and (3) industry 
(four-digit classification). In each instance the phase-in tier which 
applies to that industry or group is indicated.
    (b) Employers are required to utilize the most detailed 
classification which applies to their industry. Where an employer's 
four-digit SIC code is listed, the tier applicable to that code 
determines the minumum wage phase-in schedule for that employer. (See 
Sec. 510.10, above).
    (c) Where an indusry is not listed by four-digit SIC code, employers 
shall utilize the three-digit which applies to their industry. If a 
three-digit code is not listed, employers shall use the applicable two-
digit code.

[55 FR 12120, Mar. 30, 1990; 55 FR 12778, Apr. 5, 1990]



Sec. 510.23  Agricultural activities eligible for minimum wage phase-in.

    Agriculture activities eligible for an extended phase-in of the 
minimum wage in Major groups 01, 02, and 07 have been incorporated into 
Appendix B--Nonmanufacturing Industries Eligible for Minimum Wage Phase-
In. Applicable wage rates are effective retroactive to April 1, 1990. 
Employers in the sugarcane farming industry (SIC Number

[[Page 74]]

0133) who are subject to Tier 3 wage rates but who have paid wage rates 
based on Tier 2 wage rates may not take any action to recoup such 
payments where those actions would have the effect of reducing the wage 
rate being paid at the time of such recoupment to below that required 
under Tier 3.

[55 FR 53247, Dec. 27, 1990]



Sec. 510.24  Governmental entities eligible for minimum wage phase-in.

    (a) The Commonwealth government of Puerto Rico has been determined 
to be eligible for treatment under Tier 2, on the basis of wage data 
supplied to the Department.
    (b) Appendix C of this part contains a listing of Commonwealth 
government corporations, indicating the phase-in tier which applies. 
Entities which do not appear on the list are those for which no wage 
data were supplied. These entities are therefore categorized under Tier 
1, and are ineligible for an extended phase-in.
    (c) Appendix D of the part contains a listing of municipalities, 
indicating the phase-in tier which applies. Municipalities categorized 
under Tier 1 are those which failed to supply wage data.
    (d) Employees of municipalities who have reason to believe that the 
municipality by which they are employed has been incorrectly 
categorized, e.g., categorized under Tier 3 instead of Tier 2, may no 
later than June 1, 1990, file with the Administrator a petition for 
review. The petition shall be accompanied by any information the 
employee may have to support a determination that the municipality is 
incorrectly categorized. In the event the Administrator determines that 
a tier other than that listed in appendix D of this part applies, the 
affected municipality shall be liable for retroactive payment of any 
back wages found to be due.
    (e) Certain employees of municipalities or government corporations 
in which the average wage is less than $4.00 per hour are eligible to be 
paid under Tier 4, rather than Tier 3. Tier 4 applies only to those 
employees employed by municipalities or government corporations who are 
principally engaged in one or more of the ``traditional'' functions 
listed in Sec. 510.24 (a) or (b). All other employees of such entities 
must be paid in accordance with Tier 3.

[55 FR 12120, Mar. 30, 1990; 55 FR 12778, Apr. 5, 1990]



Sec. 510.25  Traditional functions of government.

    (a) Section 6(c)(4) of the Act, as amended, limits the six-year 
phase-in of the statutory minimum wage (``Tier 4'') to those employees 
with an average wage of less than $4.00 per hour who were brought under 
minimum wage coverage ``pursuant to an amendment made by the Fair Labor 
Standards Amendments of 1985.'' The Department has interpreted this 
language as referring to section 2(c) of the 1985 FLSA Amendments, which 
provided for deferred liability for minimum wage violations (until April 
15, 1986) ``with respect to any employee who would not have been covered 
under the Secretary's special enforcement policy'' published in 29 CFR 
775.2 and 775.4. The latter subsection listed those functions of State 
or local government which were determined by the Supreme Court's ruling 
in National League of Cities v. Usery, 426 U.S. 833 (1976) (subsequently 
overruled by Garcia v. San Antonio Metropolitan Transit Authority, 469 
U.S. 528 (1985)) to be integral operations of the governments in areas 
of traditional governmental functions. The listed ``traditional'' 
functions included the following:
    (1) Schools.
    (2) Hospitals.
    (3) Fire prevention.
    (4) Police protection.
    (5) Sanitation.
    (6) Public health.
    (7) Parks and recreation.
    (8) Libraries.
    (9) Museums.
    (b) The Supreme Court in National League of Cities clearly did not 
limit ``traditional'' functions of government to those set out in 
paragraph (a) of this section. The Court included within this concept 
all those governmental services which the States and their political 
subdivisions have traditionally afforded their citizens, which the 
States have regarded as integral parts of their governmental activities, 
and which

[[Page 75]]

State and local governments are created to provide. The Department 
interprets the Court's analysis of ``traditional'' functions as turning 
in large part upon whether the States or local governments had, prior to 
initial enactment of federal regulatory legislation applicable to a 
particular field of service or activity (such as FLSA), generally 
established themselves as providers of the services. The Department 
therefore views the following government functions as falling within the 
``traditional'' category:
    (1) Finance (including Auditor, Budget and Comptroller).
    (2) Elections.
    (3) Personnel.
    (4) Public works.
    (5) Office of the Mayor.
    (6) Legal Affairs.
    (7) Planning.
    (8) Waterworks.
    (9) Social services.
    (10) Street and highway construction and maintenance.
    (11) Automobile licensing.
    (12) Sewage treatment.
    (c) Employees whose primary function falls within one or more of the 
activities listed in paragraph (a) or (b) of this section, are therefore 
considered to be engaged in ``traditional'' functions of government. 
This would include employees who provide support functions for such 
activities, such as clerical, secretarial, supply and janitorial.
    (d) No employees of a municipality or government corporation may be 
paid in accordance with the Tier 4 phase-in schedule unless the 
employee:
    (1) Is engaged in one of the specific activities listed in 
paragraphs (a) and (b) of this section, and
    (2) Is employed by a municipality or government corporation in which 
the average wage is less than $4.00 per hour.

 Appendix A to Part 510--Manufacturing Industries Eligible for Minimum 
                              Wage Phase-In

    This appendix contains a listing of all manufacturing industries for 
which data were collected and compiled by the Commonwealth of Puerto 
Rico for purposes of implementing the 1989 Amendments to FLSA. This 
listing follows the order and classifications used in the SIC Manual, 
1987, which is incorporated by reference in these regulations 
(Sec. 510.21).
    The data in this appendix are presented by major industry group 
(two-digit classification), industry group number (three-digit 
classification), and industry number (four-digit classification). Tiers 
will not be listed for industry categories in which there were fewer 
than three employers, in conformance with standard procedures used by 
the Commonwealth of Puerto Rico in collecting and publishing these data 
until such time as Puerto Rico receives appropriate waivers of 
confidentiality from all employers in such categories. These categories 
are noted with an ``a'' on the following table. In addition, no tier 
will be listed where an industry was not included in the original 
survey, because it was not in existence, because the industry was too 
small to be included, or for other reasons.
    Employers who do not find the four-digit classification for their 
industry shall refer to the appropriate three-digit classification under 
which their establishment falls. If the appropriate three-digit 
classification is not listed, employers shall refer to the appropriate 
two-digit classification. For example, no tier is listed for industry 
number 2034, dried and dehydrated fruits, vegetables, and soup mixes. 
Thus, an employer in industry 2034 must use the tier listed for industry 
group 203, i.e. Tier 2.
    Further, employers who find the appropriate four-digit designation 
in this appendix must use that designation and cannot refer to a two- or 
three-digit classification. For example, an employer in industry number 
2033, canned fruits, vegetables, preserves, jams, and jellies, which has 
a Tier 1 designation, cannot use the Tier 2 designation of industry 
group 203, canned, frozen, and preserved fruits, vegetables, and food 
specialties.
    If no four-digit, three-digit, or two-digit classification is listed 
for an industry, employees in that group must pay the Tier 1 rates.
    Important: In referring to this appendix to determine appropriate 
tier designations, please note that certain categories of employees are 
subject to treatment under Tier 1 regardless of the average hourly wage 
rate for the industry and the tier designation contained herein. These 
employees, as listed in the 1989 Amendments, are those employed by:
    (a) The United States
    (b) An establishment that is a hotel, motel, or restaurant, or
    (c) Any other retail or service establishment that employs such 
employee in connection with the preparation or offering of food or 
beverages for human consumption, either on the premises, or by such 
services as catering, banquet, box lunch, or curb or counter service, to 
the public, to employees, or to members or guests of clubs.

[[Page 76]]

    Please note that these named categories may not correspond exactly 
to categories established by the SIC manual.

                        Manufacturing Industries
------------------------------------------------------------------------
                 Industry
 Major group      group       Industry    Tier           Industry
                  number       number
------------------------------------------------------------------------
20...........  ...........  ...........       1  Food and kindred
                                                  products.
                       201  ...........       2  Meat products.
               ...........         2011       2  Meat packing plants.
               ...........         2013       1  Sausages and other
                                                  prepared meat
                                                  products.
               ...........         2015       2  Poultry slaughtering
                                                  and processing.
                       202  ...........       1  Dairy products.
               ...........         2022       a  Natural, processed, and
                                                  imitation cheese.
               ...........         2023       1  Dry, condensed, and
                                                  evaporated dairy
                                                  products.
               ...........         2024       1  Ice cream and frozen
                                                  desserts.
               ...........         2026       1  Fluid milk.
                       203  ...........       2  Canned, frozen, and
                                                  preserved fruits,
                                                  vegetables, and food
                                                  specialties.
               ...........         2032       a  Canned specialties.
               ...........         2033       1  Canned fruits,
                                                  vegetables, preserves,
                                                  jams, and jellies.
               ...........         2035       3  Pickled fruits and
                                                  vegetables, vegetable
                                                  sauces and seasonings,
                                                  and salad dressings.
               ...........         2037       2  Frozen fruits, fruit
                                                  juices, and
                                                  vegetables.
               ...........         2038       3  Frozen specialties, not
                                                  elsewhere classified.
                       204  ...........       1  Grain mill products.
               ...........         2041       a  Flour and other grain
                                                  mill products.
               ...........         2043       a  Cereal breakfast foods.
               ...........         2044       1  Rice milling.
               ...........         2045       1  Prepared flour mixes
                                                  and doughs.
               ...........         2046       1  Wet corn milling.
               ...........         2048       1  Prepared feeds and feed
                                                  ingredients for
                                                  animals and fowls,
                                                  except dogs and cats.
                       205  ...........       1  Bakery products.
               ...........         2051       1  Bread and other bakery
                                                  products, except
                                                  cookies and crackers.
               ...........         2052       1  Cookies and crackers.
               ...........         2053       a  Frozen bakery products,
                                                  except bread.
                       206  ...........       1  Sugar and confectionery
                                                  products.
               ...........         2061       1  Cane sugar, except
                                                  refining.
               ...........         2062       a  Cane sugar refining.
               ...........         2064       1  Candy and other
                                                  confectionery
                                                  products.
               ...........         2066       3  Chocolate and cocoa
                                                  products.
               ...........         2067       a  Chewing gum.
                       208  ...........       1  Beverages.
               ...........         2082       1  Malt beverages.
               ...........         2084       3  Wines, brandy, and
                                                  brandy spirits.
               ...........         2085       1  Distilled and blended
                                                  liquors.
               ...........         2086       1  Bottled and canned soft
                                                  drinks and carbonated
                                                  waters.
               ...........         2087       1  Flavoring extracts and
                                                  flavoring syrups, not
                                                  elsewhere classified.
                       209  ...........       1  Miscellaneous food
                                                  preparations and
                                                  kindred products.
               ...........         2091       1  Canned and cured fish
                                                  and seafoods.
               ...........         2095       2  Roasted coffee.
               ...........         2096       1  Potato chips, corn
                                                  chips, and similar
                                                  snacks.
               ...........         2097       3  Manufactured ice.
               ...........         2098       a  Macaroni, spaghetti,
                                                  vermicelli, and
                                                  noodles.
               ...........         2099       2  Food preparations, not
                                                  elsewhere classified.
21...........  ...........  ...........       1  Tobacco products.
                       211  ...........       a  Cigarettes.
               ...........         2111       a  Cigarettes.
                       212  ...........       1  Cigars.
               ...........         2121       1  Cigars.
                       213  ...........       1  Chewing and smoking
                                                  tobacco and snuff.
               ...........         2131       1  Chewing and smoking
                                                  tobacco and snuff.
                       214  ...........       a  Tobacco stemming and
                                                  redrying.
               ...........         2141       a  Tobacco stemming and
                                                  redrying.
22...........  ...........  ...........       1  Textile mill products.
                       221  ...........       1  Broadwoven fabric
                                                  mills, cotton.
               ...........         2211       1  Broadwoven fabric
                                                  mills, cotton.
                       224  ...........       1  Narrow fabric and other
                                                  smallwares mills:
                                                  cotton, wool, silk,
                                                  and manmade fiber.
               ...........         2241       1  Narrow fabric and other
                                                  smallwares mills:
                                                  cotton, wool, silk,
                                                  and manmade fiber.
                       225  ...........       2  Knitting mills.
               ...........         2251       1  Women's full-length and
                                                  knee-length hosiery,
                                                  except socks.

[[Page 77]]

 
               ...........         2253       2  Knit outerwear mills.
               ...........         2254       3  Knit underwear and
                                                  nightwear mills.
                       226  ...........       1  Dyeing and finishing
                                                  textiles, except wool
                                                  fabrics and knit
                                                  goods.
               ...........         2261       3  Finishers of broadwoven
                                                  fabrics of cotton.
               ...........         2262       1  Finishers of broadwoven
                                                  fabrics of manmade
                                                  fiber and silk.
                       227  ...........       1  Carpets and rugs.
               ...........         2273       1  Carpets and rugs.
                       228  ...........       3  Yarn and thread mills.
               ...........         2281       3  Yarn spinning mills.
23...........  ...........  ...........       2  Apparel and other
                                                  finished products made
                                                  from fabrics and
                                                  similar materials.
                       231  ...........       3  Men's and boys' suits,
                                                  coats, and overcoats.
               ...........         2311       3  Men's and boys' suits,
                                                  coats, and overcoats.
                       232  ...........       2  Men's and boys'
                                                  furnishings, work
                                                  clothing, and allied
                                                  garments.
               ...........         2321       2  Men's and boys' shirts
                                                  except work shirts.
               ...........         2322       1  Men's and boys'
                                                  underwear and
                                                  nightwear.
               ...........         2323       2  Men's and boys'
                                                  neckwear.
               ...........         2325       2  Men's and boys'
                                                  separate trousers and
                                                  slacks.
               ...........         2326       3  Men's and boys' work
                                                  clothing.
               ...........         2329       3  Men's and boys'
                                                  clothing, not
                                                  elsewhere classified.
                       233  ...........       3  Women's, misses', and
                                                  juniors' outerwear.
               ...........         2331       3  Women's, misses', and
                                                  juniors' blouses and
                                                  shirts.
               ...........         2335       3  Women's, misses', and
                                                  juniors dresses.
               ...........         2337       3  Women's, misses, and
                                                  juniors' suits,
                                                  skirts, and coats.
               ...........         2339       2  Women's, misses', and
                                                  juniors' outerwear,
                                                  not elsewhere
                                                  classified.
                       234  ...........       2  Women's, misses',
                                                  children's, and
                                                  infants'
                                                  undergarments.
               ...........         2341       2  Women's, misses',
                                                  children's, and
                                                  infants' underwear and
                                                  nightwear.
               ...........         2342       2  Brassieres, girdles,
                                                  and allied garments.
                       235  ...........       3  Hats, caps, and
                                                  millinery
               ...........         2353       3  Hats, caps, and
                                                  millinery
                       236  ...........       3  Girls', children's, and
                                                  infants' outerwear.
               ...........         2361       3  Girls', children's, and
                                                  infants' dresses,
                                                  blouses, and shirts.
               ...........         2369       3  Girls', children's, and
                                                  infants' outerwear,
                                                  not elsewhere
                                                  classified.
                       238  ...........       3  Miscellaneous apparel
                                                  and accessories.
               ...........         2385       3  Waterproof outerwear.
               ...........         2387       3  Apparel belts.
               ...........         2389       3  Apparel and
                                                  accessories, not
                                                  elsewhere classified.
                       239  ...........       3  Miscellaneous
                                                  fabricated textile
                                                  products.
               ...........         2391       2  Curtains and draperies.
               ...........         2392       3  Housefurnishings,
                                                  except curtains and
                                                  draperies.
               ...........         2393       3  Textile bags.
               ...........         2395       2  Pleating, decorative
                                                  and novelty stitching,
                                                  and tucking for the
                                                  trade.
               ...........         2396       2  Automotive trimmings,
                                                  apparel findings, and
                                                  related products.
               ...........         2399       3  Fabricated textile
                                                  products, not
                                                  elsewhere classified.
24...........  ...........  ...........       2  Lumber and wood
                                                  products, except
                                                  furniture.
                       242  ...........       3  Sawmills and planing
                                                  mills.
               ...........         2421       3  Sawmills and planing
                                                  mills, general.
                       243  ...........       2  Millwork, veneer,
                                                  plywood, and
                                                  structural wood
                                                  members.
               ...........         2431       2  Millwork.
               ...........         2434       2  Wood kitchen cabinets.
               ...........         2435       a  Hardwood veneer and
                                                  plywood.
                       244  ...........       3  Wood containers.
               ...........         2448       3  Wood pallets and skids.
                       245  ...........       3  Wood buildings and
                                                  mobile homes.
               ...........         2451       3  Mobile homes.
                       249  ...........       2  Miscellaneous wood
                                                  products.
               ...........         2491       2  Wood preserving.
               ...........         2499       2  Wood products, not
                                                  elsewhere classified.
25...........  ...........  ...........       2  Furniture and fixtures.
                       251  ...........       3  Household furniture.
               ...........         2511       3  Wood household
                                                  furniture, except
                                                  upholstered.
               ...........         2512       3  Wood household
                                                  furniture,
                                                  upholstered.
               ...........         2514       3  Metal household
                                                  furniture.
               ...........         2515       2  Mattresses,
                                                  foundations, and
                                                  convertible beds.
               ...........         2517       3  Wood television, radio,
                                                  phonograph, and sewing
                                                  machine cabinets.
               ...........         2519       3  Household furniture,
                                                  not elsewhere
                                                  classified.
                       252  ...........       2  Office furniture.
               ...........         2521       a  Wood office furniture.
               ...........         2522       2  Office furniture,
                                                  except wood.
                       253  ...........       3  Public building and
                                                  related furniture.
               ...........         2531       3  Public building and
                                                  related furniture.

[[Page 78]]

 
                       254  ...........       1  Partitions, shelving,
                                                  lockers, and office
                                                  and store fixtures.
               ...........         2541       2  Wood office and store
                                                  fixtures, partitions,
                                                  shelving, and lockers.
               ...........         2542       1  Office and store
                                                  fixtures, partitions,
                                                  shelving, and lockers,
                                                  except wood.
                       259  ...........       2  Miscellaneous furniture
                                                  and fixtures.
               ...........         2591       3  Drapery hardware and
                                                  window blinds and
                                                  shades.
               ...........         2599       a  Furniture and fixtures,
                                                  not elsewhere
                                                  classified.
26...........  ...........  ...........       1  Paper and allied
                                                  products.
                       261  ...........       1  Pulp mills.
               ...........         2611       1  Pulp mills.
                       262  ...........       2  Paper mills.
               ...........         2621       2  Paper mills.
                       263  ...........       a  Paperboard mills.
               ...........         2631       a  Paperboard mills.
                       265  ...........       1  Paperboard containers
                                                  and boxes.
               ...........         2652       1  Setup paperboard boxes.
               ...........         2653       1  Corrugated and solid
                                                  fiber boxes.
               ...........         2655       1  Fiber cans, tubes,
                                                  drums, and similar
                                                  products.
               ...........         2657       1  Folding paperboard
                                                  boxes, including
                                                  sanitary.
                       267  ...........       1  Converted paper and
                                                  paperboard products,
                                                  except containers and
                                                  boxes.
               ...........         2671       2  Packaging paper and
                                                  plastics film, coated
                                                  and laminated.
               ...........         2672       a  Coated and laminated
                                                  paper, not elsewhere
                                                  classified.
               ...........         2673       2  Plastics, foil, and
                                                  coated paper bags.
               ...........         2674       1  Uncoated paper and
                                                  multiwall bags.
               ...........         2676       1  Sanitary paper
                                                  products.
               ...........         2677       1  Envelopes.
               ...........         2678       3  Stationery, tablets,
                                                  and related products.
               ...........         2679       a  Converted paper and
                                                  paperboard products,
                                                  not elsewhere
                                                  classified.
27...........  ...........  ...........       1  Printing, publishing,
                                                  and allied industries.
                       271  ...........       1  Newspapers: publishing,
                                                  or publishing and
                                                  printing.
               ...........         2711       1  Newspapers: publishing,
                                                  or publishing and
                                                  printing.
                       273  ...........       a  Books.
               ...........         2731       a  Books: publishing, or
                                                  publishing and
                                                  printing.
               ...........         2732       3  Book printing.
                       274  ...........       1  Miscellaneous
                                                  publishing.
               ...........         2741       1  Miscellaneous
                                                  publishing.
                       275  ...........       1  Commercial printing.
               ...........         2752       1  Commercial printing,
                                                  lithographic.
               ...........         2754       1  Commercial printing,
                                                  gravure.
               ...........         2759       1  Commercial printing,
                                                  not elsewhere
                                                  classified.
                       276  ...........       1  Manifold business
                                                  forms.
               ...........         2761       1  Manifold business
                                                  forms.
                       278  ...........       1  Blankbooks, looseleaf
                                                  binders, and
                                                  bookbinding and
                                                  related work.
               ...........         2782       1  Blankbooks, looseleaf
                                                  binders and devices.
                       279  ...........       1  Service industries for
                                                  the printing trade.
               ...........         2796       1  Platemaking and related
                                                  services.
28...........  ...........  ...........       1  Chemicals and allied
                                                  products.
                       281  ...........       1  Industrial inorganic
                                                  chemicals.
               ...........         2813       1  Industrial gases.
               ...........         2819       1  Industrial inorganic
                                                  chemicals, not
                                                  elsewhere classified.
                       282  ...........       1  Plastics materials and
                                                  synthetic resins,
                                                  synthetic rubber,
                                                  cellulosic and other
                                                  manmade fibers, except
                                                  glass.
               ...........         2821       a  Plastics materials,
                                                  synthetic resins, and
                                                  nonvulcanizable
                                                  elastomers.
               ...........         2822       2  Synthetic rubber
                                                  (vulcanizable
                                                  elastomers).
                       283  ...........       1  Drugs.
               ...........         2833       1  Medicinal chemicals and
                                                  botanical products.
               ...........         2834       1  Pharmaceutical
                                                  preparations.
               ...........         2835       1  In vitro and in vivo
                                                  diagnostic substances.
               ...........         2836       1  Biological products,
                                                  except diagnostic
                                                  substances.
                       284  ...........       1  Soap, detergents, and
                                                  cleaning preparations;
                                                  perfumes, cosmetics,
                                                  and other toilet
                                                  preparations.
               ...........         2841       1  Soap and other
                                                  detergents, except
                                                  specialty cleaners.
               ...........         2842       1  Specialty cleaning,
                                                  polishing, and
                                                  sanitation
                                                  preparations.
               ...........         2844       1  Perfumes, cosmetics,
                                                  and other toilet
                                                  preparations.
                       285  ...........       1  Paints, varnishes,
                                                  lacquers, enamels, and
                                                  allied products.
               ...........         2851       1  Paints, varnishes,
                                                  lacquers, enamels, and
                                                  allied products.
                       286  ...........       1  Industrial organic
                                                  chemicals.
               ...........         2865       1  Cyclic organic crudes
                                                  and intermediates, and
                                                  organic dyes and
                                                  pigments.
               ...........         2869       a  Industrial organic
                                                  chemicals, not
                                                  elsewhere classified.
                       287  ...........       1  Agricultural chemicals.
               ...........         2873       1  Nitrogenous
                                                  fertilizers.

[[Page 79]]

 
               ...........         2879       1  Pesticides and
                                                  agricultural
                                                  chemicals, not
                                                  elsewhere classified.
                       289  ...........       1  Miscellaneous chemical
                                                  products.
               ...........         2891       1  Adhesives and sealants.
               ...........         2899       1  Chemicals and chemical
                                                  preparations, not
                                                  elsewhere classified.
29...........  ...........  ...........       1  Petroleum refining and
                                                  related industries.
                       291  ...........       1  Petroleum refining.
               ...........         2911       1  Petroleum refining.
                       295  ...........       1  Asphalt paving and
                                                  roofing materials.
               ...........         2951       1  Asphalt paving mixtures
                                                  and blocks.
               ...........         2952       1  Asphalt felts and
                                                  coatings.
                       299  ...........       a  Miscellaneous products
                                                  of petroleum and coal.
               ...........         2992       a  Lubricating oils and
                                                  greases.
30...........  ...........  ...........       1  Rubber and
                                                  miscellaneous plastics
                                                  products.
                       302  ...........       1  Rubber and plastics
                                                  footwear.
               ...........         3021       1  Rubber and plastics
                                                  footwear.
                       305  ...........       2  Gaskets, packing, and
                                                  sealing devices and
                                                  rubber and plastics
                                                  hose and belting.
               ...........         3052       2  Rubber and plastics
                                                  hose and belting.
                       306  ...........       2  Fabricated rubber
                                                  products, not
                                                  elsewhere classified.
               ...........         3069       2  Fabricated rubber
                                                  products, not
                                                  elsewhere classified.
                       308  ...........       1  Miscellaneous plastics
                                                  products.
               ...........         3081       a  Unsupported plastics
                                                  film and sheet.
               ...........         3082       3  Unsupported plastics
                                                  profile shapes.
               ...........         3083       1  Laminated plastics
                                                  plate, sheet, and
                                                  profile shapes.
               ...........         3084       a  Plastics pipe.
               ...........         3085       1  Plastics bottles.
               ...........         3086       2  Plastics foam products.
               ...........         3087       3  Custom compounding of
                                                  purchased plastics
                                                  resin.
               ...........         3088       1  Plastics plumbing
                                                  fixtures.
               ...........         3089       1  Plastics products, not
                                                  elsewhere classified.
31...........  ...........  ...........       2  Leather and leather
                                                  products.
                       313  ...........       2  Boot and shoe cut stock
                                                  and findings.
               ...........         3131       2  Boot and shoe cut stock
                                                  and findings.
                       314  ...........       2  Footwear, except
                                                  rubber.
               ...........         3142       b  House slippers.
               ...........         3143       2  Men's footwear, except
                                                  athletic.
               ...........         3144       1  Women's footwear,
                                                  except athletic.
               ...........         3149       2  Footwear, except
                                                  rubber, not elsewhere
                                                  classified.
                       315  ...........       3  Leather gloves and
                                                  mittens.
               ...........         3151       3  Leather gloves and
                                                  mittens.
                       316  ...........       3  Luggage.
               ...........         3161       3  Luggage.
                       317  ...........       2  Handbags and other
                                                  personal leather
                                                  goods.
               ...........         3171       3  Women's handbags and
                                                  purses.
               ...........         3172       1  Personal leather goods,
                                                  except women's
                                                  handbags and purses.
32...........  ...........  ...........       1  Stone, clay, glass, and
                                                  concrete products.
                       321  ...........       2  Flat glass.
               ...........         3211       2  Flat glass.
                       322  ...........       1  Glass and glassware,
                                                  pressed or blown.
               ...........         3221       1  Glass containers.
                       323  ...........       1  Glass products, made of
                                                  purchased glass.
               ...........         3231       1  Glass products, made of
                                                  purchased glass.
                       324  ...........       1  Cement, hydraulic.
               ...........         3241       1  Cement, hydraulic.
                       326  ...........       3  Pottery and related
                                                  products.
               ...........         3261       3  Vitreous china plumbing
                                                  fixtures and china and
                                                  earthenware fittings
                                                  and bathroom
                                                  accessories.
               ...........         3269       3  Pottery products, not
                                                  elsewhere classified.
                       327  ...........       1  Concrete, gypsum, and
                                                  plaster products.
               ...........         3271       2  Concrete block and
                                                  brick.
               ...........         3272       1  Concrete products,
                                                  except block and
                                                  brick.
               ...........         3273       1  Ready-mixed concrete.
               ...........         3274       1  Lime.
               ...........         3275       a  Gypsum products.
                       328  ...........       1  Cut stone and stone
                                                  products.
               ...........         3281       1  Cut stone and stone
                                                  products.
                       329  ...........       1  Abrasive, asbestos, and
                                                  miscellaneous
                                                  nonmetallic mineral
                                                  products.
               ...........         3295       a  Minerals and earths,
                                                  ground or otherwise
                                                  treated.
               ...........         3296       1  Mineral wool.
33...........  ...........  ...........       1  Primary metal
                                                  industries.

[[Page 80]]

 
                       331  ...........       1  Steel works, blast
                                                  furnaces, and rolling
                                                  and finishing mills.
               ...........         3312       1  Steel works, blast
                                                  furnaces (including
                                                  coke ovens), and
                                                  rolling mills.
               ...........         3317       1  Steel pipe and tubes.
                       334  ...........       1  Secondary smelting and
                                                  refining of nonferrous
                                                  metals.
               ...........         3341       1  Secondary smelting and
                                                  refining of nonferrous
                                                  metals.
                       335  ...........       1  Rolling, drawing, and
                                                  extruding of
                                                  nonferrous metals.
               ...........         3351       1  Rolling, drawing, and
                                                  extruding of copper.
               ...........         3353       a  Aluminum sheet, plate,
                                                  and foil.
               ...........         3354       1  Aluminum extruded
                                                  products.
                       336  ...........       a  Nonferrous foundries
                                                  (castings).
               ...........         3365       a  Aluminum foundries.
                       339  ...........       1  Miscellaneous primary
                                                  metal products.
               ...........         3398       a  Metal heat treating.
               ...........         3399       1  Primary metal products,
                                                  not elsewhere
                                                  classified.
34...........  ...........  ...........       1  Fabricated metal
                                                  products, except
                                                  machinery and
                                                  transportation
                                                  equipment.
                       341  ...........       1  Metal cans and shipping
                                                  containers.
               ...........         3411       1  Metal cans.
               ...........         3412       1  Metal shipping barrels,
                                                  drums, kegs, and
                                                  pails.
                       342  ...........       1  Cutlery, handtools, and
                                                  general hardware.
               ...........         3421       3  Cutlery.
               ...........         3423       a  Hand and edge tools,
                                                  except machine tools
                                                  and handsaws.
               ...........         3429       a  Hardware, not elsewhere
                                                  classified.
                       343  ...........       2  Heating equipment,
                                                  except electric and
                                                  warm air; and plumbing
                                                  fixtures.
               ...........         3433       2  Heating equipment,
                                                  except electric and
                                                  warm air furnaces.
                       344  ...........       2  Fabricated structural
                                                  metal products.
               ...........         3441       1  Fabricated structural
                                                  metal.
               ...........         3442       2  Metal doors, sash,
                                                  frames, molding, and
                                                  trim.
               ...........         3443       1  Fabricated plate work
                                                  (boiler shops).
               ...........         3444       2  Sheet metal work.
               ...........         3446       3  Architectural and
                                                  ornamental metal work.
               ...........         3449       2  Miscellaneous
                                                  structural metal work.
                       345  ...........       1  Screw machine products,
                                                  and bolts, nuts,
                                                  screws, rivets, and
                                                  washers.
               ...........         3452       1  Bolts, nuts, screws,
                                                  rivets, and washers.
                       346  ...........       1  Metal forgings and
                                                  stampings.
               ...........         3469       1  Metal stampings, not
                                                  elsewhere classified.
                       347  ...........       2  Coating, engraving, and
                                                  allied services.
               ...........         3471       2  Electroplating,
                                                  plating, polishing,
                                                  anodizing and
                                                  coloring.
                       349  ...........       2  Miscellaneous
                                                  fabricated metal
                                                  products.
               ...........         3494       1  Valves and pipe
                                                  fittings, not
                                                  elsewhere classified.
               ...........         3495       2  Wire springs.
               ...........         3496       1  Miscellaneous
                                                  fabricated wire
                                                  products.
               ...........         3498       a  Fabricated pipe and
                                                  pipe fittings.
               ...........         3499       2  Fabricated metal
                                                  products, not
                                                  elsewhere classified.
35...........  ...........  ...........       1  Industrial and
                                                  commercial machinery
                                                  and computer
                                                  equipment.
                       353  ...........       a  Construction, mining,
                                                  and materials handling
                                                  machinery and
                                                  equipment.
               ...........         3535       a  Conveyors and conveying
                                                  equipment.
                       354  ...........       1  Metalworking machinery
                                                  and equipment.
               ...........         3541       a  Machine tools, metal
                                                  cutting types.
               ...........         3544       1  Special dies and tools,
                                                  die sets, jigs and
                                                  fixtures, and
                                                  industrial molds.
               ...........         3545       1  Cutting tools, machine
                                                  tool accessories, and
                                                  machinists' precision
                                                  measuring devices.
                       355  ...........       1  Special industry
                                                  machinery, except
                                                  metalworking
                                                  machinery.
               ...........         3555       1  Printing trades
                                                  machinery and
                                                  equipment.
                       356  ...........       1  General industrial
                                                  machinery and
                                                  equipment.
               ...........         3562       a  Ball and roller
                                                  bearings.
               ...........         3563       1  Air and gas
                                                  compressors.
               ...........         3564       a  Industrial and
                                                  commercial fans and
                                                  blowers and air
                                                  purification
                                                  equipment.
               ...........         3568       1  Mechanical power
                                                  transmission
                                                  equipment, not
                                                  elsewhere classified.
               ...........         3569       1  General industrial
                                                  machinery and
                                                  equipment, not
                                                  elsewhere classified.
                       357  ...........       1  Computer and office
                                                  equipment.
               ...........         3571       3  Electronic computers.
               ...........         3572       1  Computer storage
                                                  devices.
               ...........         3577       1  Computer peripheral
                                                  equipment, not
                                                  elsewhere classified.
               ...........         3579       1  Office machines, not
                                                  elsewhere classified.
                       358  ...........       1  Refrigeration and
                                                  service industry
                                                  machinery.
               ...........         3585       1  Air-conditioning and
                                                  warm air heating
                                                  equipment and
                                                  commercial and
                                                  industrial
                                                  refrigeration
                                                  equipment.
               ...........         3589       b  Service industry
                                                  machinery, not
                                                  elsewhere classified.
                       359  ...........       2  Miscellaneous
                                                  industrial and
                                                  commercial machinery
                                                  and equipment.
               ...........         3592       2  Carburetors, pistons,
                                                  piston rings, and
                                                  valves.

[[Page 81]]

 
               ...........         3596       a  Scales and balances,
                                                  except laboratory.
               ...........         3599       1  Industrial and
                                                  commercial machinery
                                                  and equipment, not
                                                  elsewhere classified.
36...........  ...........  ...........       1  Electronic and other
                                                  electrical equipment
                                                  and components, except
                                                  computer equipment.
                       361  ...........       1  Electronic transmission
                                                  and distribution
                                                  equipment.
               ...........         3612       1  Power, distribution,
                                                  and specialty
                                                  transformers.
               ...........         3613       1  Switchgear and
                                                  switchboard apparatus.
                       362  ...........       1  Electrical industrial
                                                  apparatus.
               ...........         3621       1  Motors and generators.
               ...........         3624       1  Carbon and graphite
                                                  products.
               ...........         3625       1  Relays and industrial
                                                  controls.
               ...........         3629       1  Electrical industrial
                                                  apparatus, not
                                                  elsewhere classified.
                       363  ...........       a  Household appliances.
               ...........         3639       a  Household appliances,
                                                  not elsewhere
                                                  classified.
                       364  ...........       1  Electric lighting and
                                                  wiring equipment.
               ...........         3641       1  Electric lamp bulbs and
                                                  tubes.
               ...........         3643       1  Current-carrying wiring
                                                  devices.
               ...........         3644       1  Noncurrent-carrying
                                                  wiring devices.
               ...........         3645       a  Residential electric
                                                  lighting fixtures.
               ...........         3646       2  Commercial, industrial,
                                                  and institutional
                                                  electric lighting
                                                  fixtures.
               ...........         3648       2  Lighting equipment, not
                                                  elsewhere classified.
                       365  ...........       1  Household audio and
                                                  video equipment, and
                                                  audio recordings.
               ...........         3651       1  Household audio and
                                                  video equipment.
               ...........         3652       a  Phonograph records and
                                                  pre-recorded audio
                                                  tapes and disks.
                       366  ...........       1  Communications
                                                  equipment.
               ...........         3661       1  Telephone and telegraph
                                                  apparatus.
               ...........         3663       1  Radio and television
                                                  broadcasting and
                                                  communications
                                                  equipment.
               ...........         3669       1  Communications
                                                  equipment, not
                                                  elsewhere classified.
                       367  ...........       1  Electronic components
                                                  and accessories.
               ...........         3672       2  Printed circuit boards.
               ...........         3674       1  Semiconductors and
                                                  related devices.
               ...........         3677       2  Electronic coils,
                                                  transformers and other
                                                  inductors.
               ...........         3678       1  Electronic connectors.
               ...........         3679       1  Electronic components,
                                                  not elsewhere
                                                  classified.
                       369  ...........       1  Miscellaneous
                                                  electrical machinery,
                                                  equipment, and
                                                  supplies.
               ...........         3692       1  Primary batteries, dry
                                                  and wet.
               ...........         3694       1  Electrical equipment
                                                  for internal
                                                  combustion engines.
37  .........  ...........  ...........       1  Transportation
                                                  Equipment.
                       371  ...........       1  Motor vehicles and
                                                  motor vehicle
                                                  equipment.
               ...........         3713       1  Truck and bus bodies.
               ...........         3714       1  Motor vehicle parts and
                                                  accessories.
                       372  ...........       1  Aircraft and parts.
               ...........         3721       a  Aircraft.
               ...........         3728       1  Aircraft parts and
                                                  auxiliary equipment,
                                                  not elsewhere
                                                  classified.
                       373  ...........       1  Ship and boat building
                                                  and repairing.
               ...........         3731       a  Ship building and
                                                  repairing.
               ...........         3732       2  Boat building and
                                                  repairing.
                       379  ...........       a  Miscellaneous
                                                  transportation
                                                  equipment.
               ...........         3792       a  Travel trailers and
                                                  campers.
38...........  ...........  ...........       1  Measuring, analyzing,
                                                  and controlling
                                                  instruments;
                                                  photographic, medical,
                                                  and optical goods,
                                                  watches and clocks.
                       381  ...........       1  Search, detection,
                                                  navigation, guidance,
                                                  aeronautical, and
                                                  nautical systems,
                                                  instruments, and
                                                  equipment.
               ...........         3812       1  Search, detection,
                                                  navigation, guidance,
                                                  aeronautical, and
                                                  nautical systems,
                                                  instruments, and
                                                  equipment.
                       382  ...........       1  Laboratory apparatus
                                                  and analytical,
                                                  optical, measuring,
                                                  and controlling
                                                  instrument.
               ...........         3821       1  Laboratory apparatus
                                                  and furniture.
               ...........         3822       1  Automatic controls for
                                                  regulating residential
                                                  and commercial
                                                  environments and
                                                  appliances.
               ...........         3823       1  Industrial instruments
                                                  for measurement,
                                                  display, and control
                                                  of process variables;
                                                  and related products.
               ...........         3824       a  Totalizing fluid meters
                                                  and counting devices.
               ...........         3825       1  Instruments for
                                                  measuring and testing
                                                  of electricity and
                                                  electrical signals.
               ...........         3829       2  Measuring and
                                                  controlling devices,
                                                  not elsewhere
                                                  classified.
                       384  ...........       1  Surgical, medical, and
                                                  dental instruments and
                                                  supplies.
               ...........         3841       1  Surgical and medical
                                                  instruments and
                                                  apparatus.
               ...........         3842       1  Orthopedic, prosthetic,
                                                  and surgical
                                                  appliances and
                                                  supplies.
               ...........         3843       1  Dental equipment and
                                                  supplies.

[[Page 82]]

 
               ...........         3844       a  X-ray apparatus and
                                                  tubes and related
                                                  irradiation apparatus.
               ...........         3845       1  Electromedical and
                                                  electrotherapeutic
                                                  apparatus.
                       385  ...........       1  Ophthalmic goods.
               ...........         3851       1  Ophthalmic goods.
                       386  ...........       a  Photographic equipment
                                                  and supplies.
               ...........         3861       a  Photographic equipment
                                                  and supplies.
                       387  ...........       1  Watches, clocks,
                                                  clockwork operated
                                                  devices, and parts.
               ...........         3873       1  Watches, clocks,
                                                  clockwork operated
                                                  devices, and parts.
39...........  ...........  ...........       1  Miscellaneous
                                                  manufacturing
                                                  industries.
                       391  ...........       1  Jewelry, silverware,
                                                  and plated ware.
               ...........         3911       1  Jewelry, precious
                                                  metal.
               ...........         3914       a  Silverware, plated
                                                  ware, and stainless
                                                  steel ware.
               ...........         3915       1  Jewelers' findings and
                                                  materials, and
                                                  lapidary work.
                       394  ...........       2  Dolls, toys, games, and
                                                  sporting and athletic
                                                  goods.
               ...........         3942       2  Dolls and stuffed toys.
               ...........         3949       2  Sporting and athletic
                                                  goods, not elsewhere
                                                  classified.
                       395  ...........       2  Pens, pencils, and
                                                  other artists'
                                                  materials.
               ...........         3951       3  Pens, mechanical
                                                  pencils, and parts.
               ...........         3952       a  Lead pencils, crayons,
                                                  and artists'
                                                  materials.
               ...........         3953       1  Marking devices.
                       396  ...........       1  Costume jewelry,
                                                  costume novelties,
                                                  buttons, and
                                                  miscellaneous notions,
                                                  except precious metal.
               ...........         3961       1  Costume jewelry and
                                                  costume novelties,
                                                  except precious metal.
               ...........         3965       a  Fasteners, buttons,
                                                  needles, and pins.
                       399  ...........       1  Miscellaneous
                                                  manufacturing
                                                  industries.
               ...........         3991       a  Brooms and brushes.
               ...........         3993       2  Signs and advertising
                                                  specialties.
               ...........         3995       2  Burial caskets.
               ...........         3999       2  Manufacturing
                                                  industries, not
                                                  elsewhere classified.
------------------------------------------------------------------------
 a=Category contained less than three employers.


[55 FR 12120, Mar. 30, 1990; 55 FR 12778, Apr. 5, 1990, as amended at 55 
FR 39575, Sept. 27, 1990; 57 FR 1103, Jan. 10, 1992]

Appendix B to Part 510--Nonmanufacturing Industries Eligible for Minimum 
                              Wage Phase-In

    This appendix contains a listing of all non-manufacturing industries 
(except those in major groups 01, 02, 08, and 09, pertaining to 
agriculture) for which data were collected and compiled by the 
Commonwealth of Puerto Rico for purposes of implementing the 1989 
Amendments to FLSA. This listing follows the order and classifications 
used in the SIC Manual, 1987, which is incorporated by reference in 
these regulations (Sec. 510.21).
    The data in this appendix are presented by major industry group 
(two-digit classification), industry group number (three-digit 
classification), and industry number (four-digit classification).
    Tiers will not be listed for industry categories in which there were 
fewer than three responding employers, or one responding employer had 
more than 80 percent of the employment in the category, in conformance 
with practices of the U.S. Bureau of Labor Statistics in collecting and 
publishing similar data, until such time as Puerto Rico receives 
appropriate waivers of confidentiality from all employers in such 
categories. These categories are noted with an ``a'' on the following 
table. In situations where one or more employers declined to furnish a 
waiver, categories are noted with a ``b'' on the following table.
    In addition, no tier will be listed where an industry was not 
included in the original survey because it was not in existence, because 
the industry was too small to be included, or for other reasons.
    Employers who do not find the four-digit classification for their 
industry shall refer to the appropriate three-digit classification under 
which their establishment falls. If the appropriate three-digit 
classification is not listed, employers shall refer to the appropriate 
two-digit classification.
    For example, no tier is listed for industry number 1423, crushed and 
broken granite. However, a tier is listed for industry group 142, 
crushed and broken stone, including riprap. Thus, an employer in 
industry 1423 must use the tier listed for industry group 142, i.e., 
Tier 1. Furthermore, employers who find the appropriate four-digit 
designation in this appendix must use that designation and cannot refer 
to a two- or three-digit classification. For example, an employer with 
industry number 5719, miscellaneous

[[Page 83]]

homefurnishings stores, which has a Tier 1 designation, cannot refer to 
industry group number 571, home furniture and furnishings stores, which 
has a Tier 2 designation.
    Important: In referring to this appendix to determine appropriate 
tier designations, please note that certain categories of employees are 
subject to treatment under Tier 1 regardless of the average hourly wage 
rate for the industry and the tier designation contained herein. These 
employees, as listed in the 1989 Amendments, are those employed by:
    (a) The United States,
    (b) An establishment that is a hotel, motel, or restaurant, or
    (c) Any other retail or service establishment that employs such 
employee in connection with the preparation or offering of food or 
beverages for human consumption, either on the premises, or by such 
services as catering, banquet, box lunch, or curb or counter service, to 
the public, to employees, or to members or guests of clubs.
    Please note that these named categories may not correspond exactly 
to categories established by the SIC manual.
    If no four-digit, three-digit, or two-digit classification is listed 
for an industry, employers in that group must pay the Tier 1 rates.

                       Nonmanufacturing Industries
------------------------------------------------------------------------
                 Industry
 Major group      group       Industry    Tier           Industry
                  number       number
------------------------------------------------------------------------
01...........  ...........  ...........       3  Agricultural production-
                                                  -crops.
                       011  ...........       3  Cash grains.
               ...........         0119       3  Cash grains, not
                                                  elsewhere classified.
                       013  ...........       3  Field crops, except
                                                  cash grains.
               ...........         0133       3  Sugarcane and sugar
                                                  beets.
               ...........         0139       3  Field crops, except
                                                  cash grains, not
                                                  elsewhere classified.
                       016  ...........       3  Vegetables and melons.
               ...........         0161       3  Vegetables and melons.
                       017  ...........       3  Fruits and tree nuts.
               ...........         0174       3  Citrus fruits.
               ...........         0179       3  Fruits and tree nuts,
                                                  not elsewhere
                                                  classified.
                       018  ...........       3  Horticultural
                                                  specialties.
               ...........         0181       3  Ornamental floriculture
                                                  and nursery products.
                       019  ...........       3  General farms,
                                                  primarily crop.
               ...........         0191       3  General farms,
                                                  primarily crop.
02...........  ...........  ...........       3  Agricultural production-
                                                  -livestock and animal
                                                  specialties.
                       021  ...........       3  Livestock, except dairy
                                                  and poultry.
               ...........         0211       3  Beef cattle feedlots.
               ...........         0213       3  Hogs.
                       024  ...........       3  Dairy farms.
               ...........         0241       3  Dairy farms.
                       025  ...........       3  Poultry and eggs.
               ...........         0251       3  Broiler, fryer, and
                                                  roaster chickens.
               ...........         0252       3  Chicken eggs.
               ...........         0254       2  Poultry hatcheries.
                       027  ...........       3  Animal specialties.
               ...........         0271       3  Fur-bearing animals and
                                                  rabbits.
               ...........         0272       2  Horse and other
                                                  equines.
               ...........         0273       3  Animal aquaculture.
               ...........         0279       3  Animal specialties, not
                                                  else where classified.
07...........  ...........  ...........       3  Agricultural services.
                       072  ...........       3  Crop services.
               ...........         0723       3  Crop preparation
                                                  services for market,
                                                  except cotton ginning.
                       074  ...........       2  Veterinary services.
                       075  ...........       a  Animal services except
                                                  veterinary.
               ...........         0751       a  Livestock services,
                                                  except veterinary.
                       078  ...........       3  Landscape and
                                                  horticultural
                                                  services.
14...........  ...........  ...........       1  Mining and quarrying of
                                                  nonmetallic minerals,
                                                  except fuels.
               ...........         1422       2  Crushed and broken
                                                  limestone.
               ...........         1429       1  Crushed and broken
                                                  stone, not elsewhere
                                                  classified.
                       144  ...........       1  Sand and gravel.
               ...........         1442       1  Construction sand and
                                                  gravel.
15...........  ...........  ...........       1  Building construction-
                                                  general contractors
                                                  and operative
                                                  builders.
                       152  ...........       1  General building
                                                  contractors-
                                                  residential buildings.
                       154  ...........       1  General building
                                                  contractors-
                                                  nonresidential
                                                  buildings.
16...........  ...........  ...........       1  Heavy construction
                                                  other than building
                                                  construction-
                                                  contractors.
                       161  ...........       1  Highway and street
                                                  construction, except
                                                  elevated highways.
               ...........         1611       1  Highway and street
                                                  construction, except
                                                  elevated highways.
                       162  ...........       1  Heavy construction,
                                                  except highway and
                                                  street construction.
               ...........         1622       1  Bridge, tunnel, and
                                                  elevated highway
                                                  construction.
               ...........         1623       1  Water, sewer, pipeline,
                                                  and communications and
                                                  power line
                                                  construction.
               ...........         1629       a  Heavy construction, not
                                                  elsewhere classified.

[[Page 84]]

 
17...........  ...........  ...........       1  Construction-special
                                                  trade contractors.
                       171  ...........       1  Plumbing, heating and
                                                  air-conditioning.
               ...........         1711       1  Plumbing, heating and
                                                  air-conditioning.
                       172  ...........       2  Painting and paper
                                                  hanging.
               ...........         1721       2  Painting and paper
                                                  hanging.
                       173  ...........       1  Electrical work.
               ...........         1731       1  Electrical work.
                       174  ...........       1  Masonry, stonework,
                                                  tile setting, and
                                                  plastering.
               ...........         1741       1  Masonry, stone setting,
                                                  and other stone work.
               ...........         1742       1  Plastering, drywall,
                                                  acoustical, and
                                                  insulation work.
               ...........         1743       1  Terrazzo, tile, marble,
                                                  and mosaic work.
                       175  ...........       a  Carpentry and floor
                                                  work.
               ...........         1751       a  Carpentry work.
                       176  ...........       2  Roofing, siding, and
                                                  sheet metal work.
               ...........         1761       2  Roofing, siding, and
                                                  sheet metal work.
                       179  ...........       1  Miscellaneous special
                                                  trade contractors.
               ...........         1791       1  Structural steel
                                                  erection.
               ...........         1793       2  Glass and glazing work.
               ...........         1794       a  Excavation work.
               ...........         1795       a  Wrecking and demolition
                                                  work.
               ...........         1796       1  Installation or
                                                  erection of building
                                                  equipment, not
                                                  elsewhere classified.
               ...........         1799       1  Special trade
                                                  contractors, not
                                                  elsewhere classified.
41...........  ...........  ...........       3  Local and suburban
                                                  transit and interurban
                                                  highway passenger
                                                  transportation.
                       411  ...........       2  Local and suburban
                                                  passenger
                                                  transportation.
               ...........         4111       2  Local and suburban
                                                  transit.
                       412  ...........       3  Taxicabs.
               ...........         4121       3  Taxicabs.
                       413  ...........       3  Intercity and rural bus
                                                  transportation.
               ...........         4131       3  Intercity and rural bus
                                                  transportation.
                       415  ...........       a  School buses.
               ...........         4151       a  School buses.
42...........  ...........  ...........       1  Motor freight
                                                  transportation and
                                                  warehousing.
                       421  ...........       1  Trucking and courier
                                                  services, except air.
                       422  ...........       1  Public warehousing and
                                                  storage.
               ...........         4221       1  Farm product
                                                  warehousing and
                                                  storage.
               ...........         4222       a  Refrigerated
                                                  warehousing and
                                                  storage.
               ...........         4225       1  General warehousing and
                                                  storage.
               ...........         4226       1  Special warehousing and
                                                  storage, not elsewhere
                                                  classified.
44...........  ...........  ...........       1  Water transportation.
                       442  ...........       a  Deep sea domestic
                                                  transportation of
                                                  freight.
               ...........         4424       a  Deep sea domestic
                                                  transportation of
                                                  freight.
                       444  ...........       1  Water transportation of
                                                  freight, not elsewhere
                                                  classified.
               ...........         4449       1  Water transportation of
                                                  freight, not elsewhere
                                                  classified.
                       449  ...........       1  Services incidental to
                                                  water transportation.
               ...........         4491       1  Marine cargo handling.
               ...........         4492       a  Towing and tugboat
                                                  services.
               ...........         4499       1  Water transportation
                                                  services, not
                                                  elsewhere classified.
45...........  ...........  ...........       1  Transportation by air.
                       451  ...........       1  Air transportation,
                                                  scheduled, and air
                                                  courier services.
               ...........         4512       1  Air transportation,
                                                  scheduled.
                       452  ...........       a  Air transportation,
                                                  nonscheduled.
               ...........         4522       a  Air transportation,
                                                  nonscheduled.
                       458  ...........       a  Airports, flying
                                                  fields, and airport
                                                  terminal services.
               ...........         4581       a  Airports, flying
                                                  fields, and airport
                                                  terminal services.
46...........  ...........  ...........       a  Pipelines, except
                                                  natural gas.
                       461  ...........       1  Pipelines, except
                                                  natural gas.
               ...........         4613       1  Refined petroleum
                                                  pipelines.
47...........  ...........  ...........       1  Transportation
                                                  services.
                       472  ...........       1  Arrangement of
                                                  passenger
                                                  transportation.
               ...........         4729       1  Arrangement of
                                                  passenger
                                                  transportation, not
                                                  elsewhere classified.
                       473  ...........       1  Arrangement of
                                                  transportation of
                                                  freight and cargo.
               ...........         4731       1  Arrangement of
                                                  transportation of
                                                  freight and cargo.
                       478  ...........       1  Miscellaneous services
                                                  incidental to
                                                  transportation.
               ...........         4785       1  Fixed facilities and
                                                  inspection and
                                                  weighing services for
                                                  motor vehicle
                                                  transportation.
48...........  ...........  ...........       1  Communications.
                       482  ...........       b  Telegraph and other
                                                  message
                                                  communications.
               ...........         4822       b  Telegraph and other
                                                  message
                                                  communications.
                       483  ...........       1  Radio and television
                                                  broadcasting stations.

[[Page 85]]

 
               ...........         4832       1  Radio broadcasting
                                                  stations.
               ...........         4833       1  Television broadcasting
                                                  stations.
                       489  ...........       3  Communications
                                                  services, not
                                                  elsewhere classified.
               ...........         4899       3  Communications
                                                  services, not
                                                  elsewhere classified.
49...........  ...........  ...........       1  Electric, gas and
                                                  sanitary services.
                       492  ...........       1  Gas production and
                                                  distribution.
               ...........         4923       1  Natural gas
                                                  transmission and
                                                  distribution.
               ...........         4925       1  Mixed, manufactured, or
                                                  liquefied petroleum
                                                  gas production and/or
                                                  distribution.
                       495  ...........       1  Sanitary services.
               ...........         4953       1  Refuse systems.
                       497  ...........       a  Irrigation systems.
               ...........         4971       a  Irrigation systems.
50...........  ...........  ...........       1  Wholesale trade-durable
                                                  goods.
                       501  ...........       1  Motor vehicles and
                                                  motor vehicle parts
                                                  and supplies.
               ...........         5012       a  Automobiles and other
                                                  motor vehicles.
               ...........         5013       1  Motor vehicle supplies
                                                  and new parts.
               ...........         5014       1  Tires and tubes.
                       502  ...........       1  Furniture and
                                                  homefurnishings.
               ...........         5021       2  Furniture.
               ...........         5023       1  Homefurnishings.
                       503  ...........       2  Lumber and other
                                                  construction
                                                  materials.
               ...........         5031       2  Lumber, plywood,
                                                  millwork, and wood
                                                  panels.
               ...........         5039       1  Construction materials,
                                                  not elsewhere
                                                  classified.
                       504  ...........       1  Professional and
                                                  commercial equipment
                                                  and supplies.
               ...........         5043       1  Photographic equipment
                                                  and supplies.
               ...........         5046       1  Commercial equipment,
                                                  not elsewhere
                                                  classified.
               ...........         5049       1  Professional equipment
                                                  and supplies, not
                                                  elsewhere classified.
                       505  ...........       1  Metals and minerals,
                                                  except petroleum.
               ...........         5051       1  Metals service centers
                                                  and offices.
                       506  ...........       1  Electrical goods.
               ...........         5063       1  Electrical apparatus
                                                  and equipment, wiring
                                                  supplies and
                                                  construction
                                                  materials.
               ...........         5064       1  Electrical appliances,
                                                  television and radio
                                                  sets.
               ...........         5065       1  Electronic parts and
                                                  equipment, not
                                                  elsewhere classified.
                       507  ...........       1  Hardware, and plumbing
                                                  and heating equipment
                                                  and supplies.
               ...........         5072       1  Hardware.
               ...........         5074       1  Plumbing and heating
                                                  equipment and supplies
                                                  (hydronics).
               ...........         5075       a  Warm air heating and
                                                  air-conditioning
                                                  equipment and
                                                  supplies.
               ...........         5078       a  Refrigeration equipment
                                                  and supplies.
                       508  ...........       1  Machinery, equipment,
                                                  and supplies.
               ...........         5082       1  Construction and mining
                                                  (except petroleum)
                                                  machinery and
                                                  equipment.
               ...........         5083       a  Farm and garden
                                                  machinery and
                                                  equipment.
               ...........         5084       1  Industrial machinery
                                                  and equipment.
               ...........         5085       1  Industrial supplies.
               ...........         5087       2  Service establishment
                                                  equipment and
                                                  supplies.
                       509  ...........       1  Miscellaneous durable
                                                  goods.
               ...........         5091       a  Sporting and
                                                  recreational goods and
                                                  supplies.
               ...........         5092       1  Toys and hobby goods
                                                  and supplies.
               ...........         5093       1  Scrap and waste
                                                  materials.
               ...........         5094       1  Jewelry, watches,
                                                  precious stones, and
                                                  precious metals.
               ...........         5099       1  Durable goods, not
                                                  elsewhere classified.
51...........  ...........  ...........       1  Wholesale trade--
                                                  nondurable goods.
                       511  ...........       1  Paper and paper
                                                  products.
               ...........         5111       1  Printing and writing
                                                  paper.
               ...........         5112       3  Stationery and office
                                                  supplies.
               ...........         5113       1  Industrial and personal
                                                  service paper.
                       512  ...........       1  Drugs, drug
                                                  proprietaries, and
                                                  druggists' sundries.
               ...........         5122       1  Drugs, drug
                                                  proprietaries, and
                                                  druggists' sundries.
                       513  ...........       2  Apparel, piece goods,
                                                  and notions.
               ...........         5131       2  Piece goods, notions,
                                                  and other dry goods.
               ...........         5136       1  Men's and boys'
                                                  clothing and
                                                  furnishings.
               ...........         5137       3  Women's, children's,
                                                  and infants' clothing
                                                  and accessories.
               ...........         5139       2  Footwear.
                       514  ...........       1  Groceries and related
                                                  products.
               ...........         5141       1  Groceries, general
                                                  line.
               ...........         5142       1  Packaged frozen foods.
               ...........         5143       a  Dairy products, except
                                                  dried or canned.
               ...........         5144       3  Poultry and poultry
                                                  products.
               ...........         5145       a  Confectionery.

[[Page 86]]

 
               ...........         5146       a  Fish and seafoods.
               ...........         5147       a  Meats and meat
                                                  products.
               ...........         5148       1  Fresh fruits and
                                                  vegetables.
               ...........         5149       1  Groceries and related
                                                  products, not
                                                  elsewhere classified.
                       515  ...........       a  Farm-product raw
                                                  materials.
               ...........         5154       a  Livestock.
                       516  ...........       1  Chemicals and allied
                                                  products.
               ...........         5169       1  Chemicals and allied
                                                  products, not
                                                  elsewhere classified.
                       517  ...........       1  Petroleum and petroleum
                                                  products.
               ...........         5171       1  Petroleum bulk stations
                                                  and terminals.
               ...........         5172       1  Petroleum and petroleum
                                                  products wholesalers,
                                                  except bulk stations
                                                  and terminals.
                       518  ...........       1  Beer, wine and
                                                  distilled alcoholic
                                                  beverages.
               ...........         5181       1  Beer and ale.
                       519  ...........       1  Miscellaneous
                                                  nondurable goods.
               ...........         5191       3  Farm supplies.
               ...........         5194       3  Tobacco and tobacco
                                                  products.
               ...........         5198       b  Paints, varnishes, and
                                                  supplies.
               ...........         5199       1  Nondurable goods, not
                                                  elsewhere classified.
52...........  ...........  ...........       2  Building materials,
                                                  hardware, garden
                                                  supply, and mobile
                                                  home dealers.
                       521  ...........       3  Lumber and other
                                                  building materials
                                                  dealers.
               ...........         5211       3  Lumber and other
                                                  building materials
                                                  dealers.
                       523  ...........       1  Paint, glass, and
                                                  wallpaper stores.
               ...........         5231       1  Paint, glass, and
                                                  wallpaper stores.
                       525  ...........       2  Hardware stores.
               ...........         5251       2  Hardware stores.
                       526  ...........       3  Retail nurseries, lawn
                                                  and garden supply
                                                  stores.
               ...........         5261       3  Retail nurseries, lawn
                                                  and garden supply
                                                  stores.
53...........  ...........  ...........       1  General merchandise
                                                  stores.
                       531  ...........       1  Department stores.
               ...........         5311       1  Department stores.
                       533  ...........       2  Variety stores.
               ...........         5331       2  Variety stores.
                       539  ...........       3  Miscellaneous general
                                                  merchandise stores.
               ...........         5399       3  Miscellaneous general
                                                  merchandise stores.
54...........  ...........  ...........       2  Food stores.
                       541  ...........       2  Grocery stores.
               ...........         5411       2  Grocery stores.
                       542  ...........       1  Meat and fish (seafood)
                                                  markets, including
                                                  freezer provisioners.
               ...........         5421       1  Meat and fish (seafood)
                                                  markets, including
                                                  freezer provisioners.
               ...........         5421       a  Meat and fish (seafood)
                                                  markets, including
                                                  freezer provisioners.
                       543  ...........       3  Fruit and vegetable
                                                  markets.
               ...........         5431       3  Fruit and vegetable
                                                  markets.
                       546  ...........       3  Retail bakeries.
               ...........         5461       3  Retail bakeries.
                       549  ...........       3  Miscellaneous food
                                                  stores.
               ...........         5499       3  Miscellaneous food
                                                  stores.
55...........  ...........  ...........       1  Automotive dealers and
                                                  gasoline service
                                                  stations.
                       551  ...........       1  Motor vehicle dealers
                                                  (new and used).
               ...........         5511       1  Motor vehicle dealers
                                                  (new and used).
                       552  ...........       2  Motor vehicle dealers
                                                  (used only).
               ...........         5521       2  Motor vehicle dealers
                                                  (used only).
                       553  ...........       1  Auto and home supply
                                                  stores.
               ...........         5531       1  Auto and home supply
                                                  stores.
                       554  ...........       3  Gasoline service
                                                  stations.
               ...........         5541       3  Gasoline service
                                                  stations.
56...........  ...........  ...........       3  Apparel and accessory
                                                  stores.
                       561  ...........       3  Men's and boys'
                                                  clothing and accessory
                                                  stores.
               ...........         5611       3  Men's and boys'
                                                  clothing and accessory
                                                  stores.
                       562  ...........       3  Women's clothing
                                                  stores.
               ...........         5621       3  Women's clothing
                                                  stores.
                       563  ...........       3  Women's accessory and
                                                  specialty stores.
               ...........         5632       3  Women's accessory and
                                                  specialty stores.
                       564  ...........       3  Children's and infants'
                                                  wear stores.
               ...........         5641       3  Children's and infants'
                                                  wear stores.
                       565  ...........       3  Family clothing stores.
               ...........         5651       3  Family clothing stores.
                       566  ...........       2  Shoe stores.
               ...........         5661       2  Shoe stores.
                       569  ...........       3  Miscellaneous apparel
                                                  and accessory stores.

[[Page 87]]

 
               ...........         5699       3  Miscellaneous apparel
                                                  and accessory stores.
57...........  ...........  ...........       2  Home furniture,
                                                  furnishings, and
                                                  equipment stores.
                       571  ...........       2  Home furniture and
                                                  furnishings stores.
               ...........         5712       2  Furniture stores.
               ...........         5713       a  Floor covering stores.
               ...........         5714       3  Drapery, curtain, and
                                                  upholstery stores.
               ...........         5719       1  Miscellaneous
                                                  homefurnishings
                                                  stores.
                       572  ...........       1  Household appliance
                                                  stores.
               ...........         5722       1  Household appliance
                                                  stores.
                       573  ...........       2  Radio, television,
                                                  consumer electronics,
                                                  and music stores.
               ...........         5731       a  Radio, television, and
                                                  consumer electronics
                                                  stores.
               ...........         5735       1  Record and prerecorded
                                                  tape stores.
58...........  ...........  ...........       1  Eating and drinking
                                                  places.
                   \1\ 581  ...........       1  Eating and drinking
                                                  places.
59...........  ...........  ...........       1  Miscellaneous retail.
                       591  ...........       1  Drug stores and
                                                  proprietary stores.
               ...........         5912       1  Drug stores and
                                                  proprietary stores.
                       592  ...........       a  Liquor stores.
               ...........         5921       a  Liquor stores.
                       593  ...........       3  Used merchandise
                                                  stores.
               ...........         5932       3  Used merchandise
                                                  stores.
                       594  ...........       1  Miscellaneous shopping
                                                  goods stores.
               ...........         5941       1  Sporting goods stores
                                                  and bicycle shops.
               ...........         5942       1  Book stores.
               ...........         5943       2  Stationery stores.
               ...........         5944       1  Jewelry stores.
               ...........         5945       3  Hobby, toy, and game
                                                  shops.
               ...........         5946       2  Camera and photographic
                                                  supply stores.
               ...........         5947       3  Gift, novelty, and
                                                  souvenir shops.
               ...........         5949       3  Sewing, needlework, and
                                                  piece goods stores.
                       596  ...........       a  Nonstore retailers.
               ...........         5962       a  Automatic merchandising
                                                  machine operators.
               ...........         5963       a  Direct selling
                                                  establishments.
                       598  ...........       2  Fuel dealers.
               ...........         5984       2  Liquefied petroleum gas
                                                  (bottled gas) dealers.
                       599  ...........       1  Retail stores, not
                                                  elsewhere classified.
               ...........         5992       3  Florists.
               ...........         5999       1  Miscellaneous retail
                                                  stores, not elsewhere
                                                  classified.
60...........  ...........  ...........       1  Depository
                                                  institutions.
                       602  ...........       1  Commercial banks.
               ...........         6021       1  National commercial
                                                  banks.
               ...........         6022       1  State commercial banks.
               ...........         6029       1  Commercial banks, not
                                                  elsewhere classified.
                       603  ...........       1  Savings institutions.
               ...........         6035       1  Savings institutions,
                                                  Federally chartered.
               ...........         6036       1  Savings institutions,
                                                  not Federally
                                                  chartered.
                       606  ...........       1  Credit unions.
               ...........         6061       1  Credit unions,
                                                  Federally chartered.
               ...........         6062       1  Credit unions, not
                                                  Federally chartered.
                       609  ...........       2  Functions related to
                                                  depository banking.
               ...........         6099       2  Functions related to
                                                  depository banking,
                                                  not elsewhere
                                                  classified.
61...........  ...........  ...........       1  Nondepository credit
                                                  institutions.
                       614  ...........       1  Personal credit
                                                  institutions.
               ...........         6141       1  Personal credit
                                                  institutions.
                       615  ...........       1  Business credit
                                                  institutions.
                                   6153       b  Short-term business
                                                  credit institutions,
                                                  except agricultural.
               ...........         6159       1  Miscellaneous business
                                                  credit institutions.
                       616  ...........       1  Mortgage bankers and
                                                  brokers.
               ...........         6162       1  Mortgage bankers and
                                                  loan correspondents.
62...........  ...........  ...........       1  Security and commodity
                                                  brokers, dealers,
                                                  exchanges, and
                                                  services.
                       621  ...........       1  Security brokers,
                                                  dealers, and flotation
                                                  companies.
               ...........         6211       1  Security brokers,
                                                  dealers, and flotation
                                                  companies.
                       622  ...........       a  Commodity contracts
                                                  brokers and dealers.
               ...........         6221       a  Commodity contracts
                                                  brokers and dealers.
63...........  ...........  ...........       1  Insurance carriers.
                       631  ...........       1  Life insurance.
               ...........         6311       1  Life insurance.
                       632  ...........       1  Accidental and health
                                                  insurance and medical
                                                  service plans.
               ...........         6321       1  Accident and health
                                                  insurance.
               ...........         6324       b  Hospital and medical
                                                  service plans.

[[Page 88]]

 
                       633  ...........       1  Fire, marine, and
                                                  casualty insurance.
               ...........         6331       1  Fire, marine, and
                                                  casualty insurance.
                       635  ...........       1  Surety insurance.
               ...........         6351       1  Surety insurance.
                       636  ...........       b  Title insurance.
               ...........         6361       b  Title insurance.
                       637  ...........       1  Pension, health, and
                                                  welfare funds.
               ...........         6371       1  Pension, health, and
                                                  welfare funds.
64...........  ...........  ...........       1  Insurance agents,
                                                  brokers, and service.
                       641  ...........       1  Insurance agents,
                                                  brokers, and service.
               ...........         6411       1  Insurance agents,
                                                  brokers, and service.
65...........  ...........  ...........       1  Real estate.
                       651  ...........       1  Real estate operators
                                                  (except developers)
                                                  and lessors.
                       653  ...........       1  Real estate agents and
                                                  managers.
               ...........         6531       1  Real estate agents and
                                                  managers.
                       655  ...........       1  Land subdividers and
                                                  developers.
               ...........         6552       1  Land subdividers and
                                                  developers, except
                                                  cemeteries.
               ...........         6553       a  Cemetery subdividers
                                                  and developers.
70...........  ...........  ...........       1  Hotels, rooming houses,
                                                  camps, and other
                                                  lodging places.
                       701  ...........       1  Hotels and motels.
               ...........         7011       1  Hotels and motels.
                       702  ...........       1  Rooming and boarding
                                                  houses.
               ...........         7021       1  Rooming and boarding
                                                  houses.
72...........  ...........  ...........       1  Personal services.
                       721  ...........       2  Laundry, cleaning, and
                                                  garment services.
                       722  ...........       3  Photographic studios,
                                                  portrait.
               ...........         7221       3  Photographic studios,
                                                  portrait.
                       723  ...........       1  Beauty shops.
               ...........         7231       1  Beauty shops.
                       724  ...........       1  Barber shops
               ...........         7241       1  Barber shops.
                       725  ...........       2  Shoe repair shops and
                                                  shoeshine parlors.
               ...........         7251       2  Shoe repair shops and
                                                  shoeshine parlors.
                       726  ...........       1  Funeral service and
                                                  crematories.
               ...........         7261       1  Funeral service and
                                                  crematories.
                       729  ...........       1  Miscellaneous personal
                                                  services.
               ...........         7299       1  Miscellaneous personal
                                                  services, not
                                                  elsewhere classified.
73...........  ...........  ...........       2  Business services.
                       731  ...........       1  Advertising.
               ...........         7311       1  Advertising agencies.
               ...........         7312       1  Outdoor advertising
                                                  services.
               ...........         7319       a  Advertising, not
                                                  elsewhere classified.
                       732  ...........       b  Consumer credit
                                                  reporting agencies,
                                                  mercantile reporting
                                                  agencies, and
                                                  adjustment and
                                                  collection agencies.
               ...........         7323       b  Credit reporting
                                                  services.
                       733  ...........       2  Mailing, reproduction,
                                                  commercial art and
                                                  photography, and
                                                  stenographic services.
               ...........         7338       2  Secretarial and court
                                                  reporting services.
                       734  ...........       3  Services to dwellings
                                                  and other buildings.
               ...........         7342       3  Disinfecting and pest
                                                  control services.
               ...........         7349       3  Building cleaning and
                                                  maintenance services,
                                                  not elsewhere
                                                  classified.
                       735  ...........       1  Miscellaneous equipment
                                                  rental and leasing.
               ...........         7359       1  Equipment rental and
                                                  leasing, not elsewhere
                                                  classified.
                       736  ...........       2  Personnel supply
                                                  services.
               ...........         7361       2  Employment agencies.
               ...........         7363       2  Help supply services.
                       737  ...........       1  Computer programming,
                                                  data processing, and
                                                  other computer related
                                                  services.
               ...........         7372       1  Prepackaged software.
               ...........         7374       1  Computer processing and
                                                  data preparation and
                                                  processing services.
               ...........         7379       1  Computer related
                                                  services, not
                                                  elsewhere classified.
                       738  ...........       3  Miscellaneous business
                                                  services.
               ...........         7382       3  Security systems
                                                  services.
               ...........         7384       1  Photofinishing
                                                  laboratories.
               ...........         7389       1  Business services, not
                                                  elsewhere classified.
75...........  ...........  ...........       1  Automotive repair,
                                                  services, and parking.
                       751  ...........       1  Automotive rental and
                                                  leasing, without
                                                  drivers.
               ...........         7513       3  Truck rental and
                                                  leasing, without
                                                  drivers.
               ...........         7514       1  Passenger car rental.
                       752  ...........       3  Automobile parking.

[[Page 89]]

 
               ...........         7521       3  Automobile parking.
                       753  ...........       1  Automotive repair
                                                  shops.
               ...........         7532       2  Top, body, and
                                                  upholstery repair
                                                  shops and paint shops.
               ...........         7534       1  Tire retreading and
                                                  repair shops.
               ...........         7538       3  General automotive
                                                  repair shops.
               ...........         7539       2  Automotive repair
                                                  shops, not elsewhere
                                                  classified.
                       754  ...........       3  Automotive services,
                                                  except repair.
               ...........         7542       3  Carwashes.
               ...........         7549       3  Automotive services,
                                                  except repair and
                                                  carwashes.
76...........  ...........  ...........       1  Miscellaneous repair
                                                  services.
                       762  ...........       1  Electrical repair
                                                  shops.
               ...........         7622       3  Radio and television
                                                  repair shops.
               ...........         7623       1  Refrigeration and air-
                                                  conditioning service
                                                  and repair shops.
               ...........         7629       1  Electrical and
                                                  electronic repair
                                                  shops, not elsewhere
                                                  classified.
                       763  ...........       2  Watch, clock, and
                                                  jewelry repair.
               ...........         7631       2  Watch, clock, and
                                                  jewelry repair.
                       764  ...........       3  Reupholstery and
                                                  furniture repair.
               ...........         7641       3  Reupholstery and
                                                  furniture repair.
                       769  ...........       1  Miscellaneous repair
                                                  shops and related
                                                  services.
               ...........         7692       2  Welding repair.
               ...........         7694       1  Armature rewinding
                                                  shops.
               ...........         7699       1  Repair shops and
                                                  related services, not
                                                  elsewhere classified.
78...........  ...........  ...........       1  Motion pictures.
                       781  ...........       1  Motion picture
                                                  production and allied
                                                  services.
               ...........         7812       1  Motion picture and
                                                  video tape production.
                       782  ...........       2  Motion picture
                                                  distribution and
                                                  allied services.
               ...........         7822       2  Motion picture and
                                                  video tape
                                                  distribution.
                       783  ...........       3  Motion picture
                                                  theaters.
               ...........         7832       3  Motion picture
                                                  theaters, except drive-
                                                  in.
               ...........         7833       a  Drive-in motion picture
                                                  theaters.
79...........  ...........  ...........       1  Amusement and
                                                  recreation services.
                       791  ...........       2  Dance studios, schools,
                                                  and halls.
               ...........         7911       2  Dance studios, schools,
                                                  and halls.
                       792  ...........       a  Theatrical producers
                                                  (except motion
                                                  picture), bands,
                                                  orchestras, and
                                                  entertainers.
               ...........         7929       a  Bands, orchestras,
                                                  actors, and other
                                                  entertainers and
                                                  entertainment groups.
                       793  ...........       3  Bowling centers.
               ...........         7933       3  Bowling centers.
                       794  ...........       a  Commercial sports.
               ...........         7941       a  Professional sports
                                                  clubs and promoters.
               ...........         7948       a  Racing, including track
                                                  operation.
                       799  ...........       2  Miscellaneous amusement
                                                  and recreation
                                                  services.
               ...........         7993       2  Coin-operated amusement
                                                  devices.
               ...........         7997       1  Membership sports and
                                                  recreation clubs.
               ...........         7999       2  Amusement and
                                                  recreation services
                                                  not elsewhere
                                                  classified.
80...........  ...........  ...........       1  Health services.
                       801  ...........       1  Offices and clinics of
                                                  doctors of medicine.
               ...........         8011       1  Offices and clinics of
                                                  doctors of medicine.
                       802  ...........       1  Offices and clinics of
                                                  dentists.
               ...........         8021       1  Offices and clinics of
                                                  dentists.
                       803  ...........       a  Offices and clinics of
                                                  doctors of osteopathy.
               ...........         8031       a  Offices and clinics of
                                                  doctors of osteopathy.
                       804  ...........       1  Offices and clinics of
                                                  other health
                                                  practitioners.
               ...........         8049       1  Offices and clinics of
                                                  health practitioners,
                                                  not elsewhere
                                                  classified.
                       805  ...........       b  Nursing and personal
                                                  care facilities.
               ...........         8059       b  Nursing and personal
                                                  care facilities, not
                                                  elsewhere classified.
                       806  ...........       1  Hospitals.
               ...........         8062       1  General medical and
                                                  surgical hospitals.
               ...........         8063       1  Psychiatric hospitals.
               ...........         8069       1  Specialty hospitals,
                                                  except psychiatric.
                       807  ...........       1  Medical and dental
                                                  laboratories.
               ...........         8071       1  Medical laboratories.
               ...........         8072       a  Dental laboratories.
                       809  ...........       1  Miscellaneous health
                                                  and allied services,
                                                  not elsewhere
                                                  classified.
               ...........         8099       1  Health and allied
                                                  services, not
                                                  elsewhere classified.
81...........  ...........  ...........       1  Legal services.
                       811  ...........       1  Legal services.
               ...........         8111       1  Legal services.
82...........  ...........  ...........       1  Educational services.
                       821  ...........       2  Elementary and
                                                  secondary schools.

[[Page 90]]

 
               ...........         8211       2  Elementary and
                                                  secondary schools.
                       822  ...........       1  Colleges, universities,
                                                  professional schools,
                                                  and junior colleges.
               ...........         8221       1  Colleges, universities,
                                                  and professional
                                                  schools.
               ...........         8222       1  Junior colleges and
                                                  technical institutes.
                       824  ...........       2  Vocational schools.
               ...........         8243       a  Data processing
                                                  schools.
               ...........         8244       2  Business and
                                                  secretarial schools.
               ...........         8249       2  Vocational schools, not
                                                  elsewhere classified.
                       829  ...........       1  Schools and educational
                                                  services, not
                                                  elsewhere classified.
               ...........         8299       1  Schools and educational
                                                  services, not
                                                  elsewhere classified.
83...........  ...........  ...........       1  Social services.
                       832  ...........       1  Individual and family
                                                  social services.
               ...........         8322       1  Individual and family
                                                  social services.
                       833  ...........       3  Job training and
                                                  vocational
                                                  rehabilitation
                                                  services.
               ...........         8331       3  Job training and
                                                  vocational
                                                  rehabilitation
                                                  services.
                       835  ...........       1  Child day care
                                                  services.
               ...........         8351       1  Child day care
                                                  services.
                       836  ...........       2  Residential care.
               ...........         8361       2  Residential care.
                       839  ...........       a  Social services, not
                                                  elsewhere classified.
               ...........         8399       a  Social services, not
                                                  elsewhere classified.
84...........  ...........  ...........       3  Museums, art galleries,
                                                  and botanical and
                                                  zoological gardens.
                       841  ...........       3  Museums and art
                                                  galleries.
               ...........         8412       3  Museums and art
                                                  galleries.
86...........  ...........  ...........       1  Membership
                                                  organizations.
                       861  ...........       1  Business associations.
               ...........         8611       1  Business associations.
                       862  ...........       1  Professional membership
                                                  organizations.
               ...........         8621       1  Professional membership
                                                  organizations.
                       863  ...........       1  Labor unions and
                                                  similar labor
                                                  organizations.
               ...........         8631       1  Labor unions and
                                                  similar labor
                                                  organizations.
                       864  ...........       2  Civic, social, and
                                                  fraternal
                                                  associations.
               ...........         8641       2  Civic, social, and
                                                  fraternal
                                                  associations.
                       866  ...........       2  Religious
                                                  organizations.
               ...........         8661       2  Religious
                                                  organizations.
                       869  ...........       2  Membership
                                                  organizations, not
                                                  elsewhere classified.
               ...........         8699       2  Membership
                                                  organizations, not
                                                  elsewhere classified.
87...........  ...........  ...........       1  Engineering,
                                                  accounting, research,
                                                  management, and
                                                  related services.
                       871  ...........       1  Engineering,
                                                  architectural, and
                                                  surveying services.
               ...........         8711       1  Engineering services.
                       872  ...........       1  Accounting, auditing,
                                                  and bookkeeping
                                                  services.
               ...........         8721       1  Accounting, auditing,
                                                  and bookkeeping
                                                  services.
                       873  ...........       1  Research, development,
                                                  and testing services.
               ...........         8733       1  Noncommercial research
                                                  organizations.
88...........  ...........  ...........       3  Private households.
                       881  ...........       3  Private households.
               ...........         8811       3  Private households.
------------------------------------------------------------------------
``a''=Category contained less than three responding employers or one
  responding employer had more than 80 percent of the employment in the
  category.
``b''=Firm(s) declined to furnish waivers in these categories.
\1\ Survey data reported on the basis of SIC code 5810. Data were not
  broken down by SIC 5812, Eating places, and 5813 Drinking places
  (Alcoholic beverages).


[55 FR 12120, Mar. 30, 1990; 55 FR 12778, Apr. 5, 1990, as amended at 55 
FR 39577, Sept. 27, 1990; 55 FR 53248, Dec. 27, 1990; 57 FR 1104, Jan. 
10, 1992]

  Appendix C to Part 510--Government Corporations Eligible for Minimum 
                              Wage Phase-In

    This appendix contains a listing of the public organizations 
(corporations) in Puerto Rico for which data have been provided by the 
Commonwealth for purposes of implementing the 1989 Amendments to FLSA. 
Such Corporations are subject to Tiers 1, 2, or 3, as set forth below. 
Corporations which are listed under Tier 3 may pay rates specified under 
Tier 4 to employees engaged in traditional activities, as defined in 
Sec. 510.25 of the regulations. All other employees are subject to Tier 
3. Organizations for which no data were provided are subject to Tier 1 
treatment.

[[Page 91]]



------------------------------------------------------------------------
              Tier                             Organization
------------------------------------------------------------------------
1                                 Automobile Accidents Compensation
                                   Administration.
1                                 Cardiovascular Center Corporation of
                                   Puerto Rico and the Caribbean.
2                                 Culebra Conservation and Development
                                   Authority.
3                                 Government Development Bank of Puerto
                                   Rico.
1                                 Highway Authority.
2                                 Industries for the Blind, Mentally
                                   Retarded, and other Disabled Persons
                                   of Puerto Rico.
1                                 Institute of Puerto Rican Culture.
2                                 Corporation for the Development and
                                   Administration of Marine, Lacustrine,
                                   and Fluvial Resources of Puerto Rico.
1                                 Metropolitan Bus Authority.
2                                 Puerto Rico Mineral Resource
                                   Development Corporation.
1                                 Musical Arts Corporation.
1                                 Public Building Authority.
1                                 Puerto Rico Institute of
                                   Cinematographic and Television Arts
                                   and Industries.
1                                 Puerto Rico Aqueducts and Sewer
                                   Authority.
1                                 Puerto Rico Communications Authority.
1                                 Puerto Rico Land Administration.
1                                 Puerto Rico Marine Shipping Authority.
1                                 Puerto Rico Medical Service
                                   Administration.
1                                 Puerto Rico Ports Authority.
1                                 Puerto Rico Musical Performing Arts
                                   Corporation.
2                                 Puerto Rico Rural Development
                                   Corporation.
3                                 Puerto Rico Sugar Board.
1                                 Puerto Rico Telephone Company.
2                                 Puerto Rico Solid Waste Management
                                   Authority.
1                                 Puerto Rico Housing Bank.
1                                 Puerto Rico Tourism Company.
3                                 Puerto Rico Renewal and Housing
                                   Corporation.
3                                 Puerto Rico Industrial Development
                                   Bank.
3                                 Recreational Development Company.
2                                 Right to Work Administration.
------------------------------------------------------------------------

 Appendix D to Part 510--Municipalities Eligible for Minimum Wage Phase-
                                   In

    This appendix contains a listing of the municipalities in Puerto 
Rico and the tier applicable to each. Municipalities with average hourly 
earnings below $4.65 but equal to or greater than $4.00 are subject to 
Tier 2, as set forth below. Municipalities with average hourly earnings 
under $4.00 are subject to Tier 3. Municipalities which are listed under 
Tier 3 may pay the rates specified under Tier 4 to employees engaged in 
traditional activities, as defined in Sec. 510.25 of the regulations. 
All other employees are subject to Tier 3. Municipalities which did not 
submit data are subject to Tier 1. The tiers set forth below are subject 
to petitions for review by affected employees, if filed prior to June 1, 
1990. If upon review it is determined that the municipality should have 
been subject to Tier 1 or 2, back wages will have to be paid to April 1, 
1990, to make up the difference between what municipal employees were 
paid and what they should have been paid.

------------------------------------------------------------------------
              Tier                             Municipality
------------------------------------------------------------------------
3                                 Adjuntas.
3                                 Aguada.
3                                 Aguadilla.
3                                 Aguas Buenas.
3                                 Aibonito.
3                                 An6asco.
3                                 Arecibo.
3                                 Arroyo.
3                                 Barceloneta.
3                                 Barranquitas.
3                                 Bayamon.
3                                 Cabo Rojo.
3                                 Caguas.
3                                 Camuy.
2                                 Canovanas.
3                                 Carolina.
3                                 Catan6o.
3                                 Cayey.
2                                 Ceiba.
3                                 Ciales.
3                                 Cidra.
3                                 Coamo.
2                                 Comerio.
3                                 Corozal.
3                                 Culebra.
2                                 Dorado.
3                                 Fajardo.
3                                 Florida.
3                                 Guanica.
3                                 Guyama.
2                                 Guayanilla.
3                                 Guaynabo.
3                                 Guarbo.
3                                 Hatillo.
3                                 Hormigueros.
3                                 Humacao.
3                                 Isabela.
3                                 Jayuya.
3                                 Juana Diaz.
3                                 Juncos.
2                                 Lajas.
3                                 Lares.
3                                 Las Marias.
3                                 Las Piedras.
3                                 Loiza.
3                                 Luquillo.
1                                 Manati.
3                                 Maricao.
3                                 Maunabo.
3                                 Mayaguez.
2                                 Moca.
3                                 Morovis.
3                                 Naguabo.
2                                 Naranjito.
3                                 Orocovis.
3                                 Patillas.
3                                 Pen6uelas.
3                                 Ponce.
3                                 Quebradillas.
3                                 Rincon.
3                                 Rio Grande.
3                                 Sabana Grande.
3                                 Salinas.
3                                 San German.
2                                 San Juan.
3                                 San Lorenzo.
3                                 San Sebastian.
3                                 Santa Isabel.
3                                 Toa Alta.
3                                 Toa Baja.
2                                 Trujillo Alto.
3                                 Utuado.
3                                 Vega Alta.
3                                 Vega Baja.
3                                 Vieques.
3                                 Villalba.
3                                 Yabucoa.

[[Page 92]]

 
3                                 Yauco.
------------------------------------------------------------------------



PART 511--WAGE ORDER PROCEDURE FOR AMERICAN SAMOA--Table of Contents




Sec.
511.1  General method for issuance of wage orders.
511.2  Initiation of proceedings; notices of hearings.
511.3  Composition and appointment of committees.
511.4  Compensation of committee members.
511.5  Vacancies and dissolution of committees.
511.6  Investigation.
511.7  Committee staff.
511.8  Prehearing statements.
511.9  Requirements for quorum and decisions.
511.10  Subjects and issues.
511.11  Pertinent data.
511.12  Committee and subcommittee meetings.
511.13  Evidence.
511.14  Procedure for receiving evidence.
511.15  Submittals prior to reports.
511.16  Reports.
511.17  Records.
511.18  Publication and effective date of wage order.
511.19  Petitions.

    Authority: 29 U.S.C. 205, 206, 208; 5 U.S.C. 551-559.

    Source: 21 FR 7669, Oct. 6, 1956, unless otherwise noted.



Sec. 511.1  General method for issuance of wage orders.

    Pursuant to authority delegated by the Secretary of Labor, the 
Administrator of the Wage and Hour Division publishes the orders that 
are required by statute to make the recommendations of industry 
committees effective as wage orders under section 6(a)(3) of the Fair 
Labor Standards Act. The wage orders issued by the Administrator must by 
law give effect to the recommendations of the industry committees. All 
wage order proceedings will be conducted in accordance with the 
standards provided in the Administrative Procedure Act as interpreted 
and applied in this part.

[55 FR 53298, Dec. 28, 1990]



Sec. 511.2  Initiation of proceedings; notices of hearings.

    (a) Wage order proceedings are initiated by order of the Secretary, 
published in the Federal Register, giving notice of hearings by industry 
committees to recommend the minimum rate or rates of wages to be paid 
under section 6 of the Act to employees in American Samoa engaged in 
commerce or in the production of goods for commerce or in any enterprise 
engaged in commerce or in the production of goods for commerce. These 
orders will contain a definition of the particular industry in American 
Samoa, for which the committee is to make its recommendations, or these 
orders will direct the committee to recommend the minimum rate or rates 
of wages for all industry in American Samoa. All such orders will make 
provision for convening the committee. Any particular industry defined 
in such an order may be a trade, business, industry, or branch thereof, 
or group of industries, in which individuals are gainfully employed.
    (b) These orders will also give reasonable notice (1) of the time 
and place of the commencement of the hearing of such witnesses and 
receiving of such evidence as may be necessary or appropriate to enable 
the committee to perform its duties and functions under the Act, (2) of 
the general nature of the wage order proceedings and the authority under 
which they are proposed, (3) of the subjects and issues involved, and 
(4) that the committee will take official notice of the economic report 
(note Sec. 511.13) and the parties will have an opportunity at the 
hearing to show any contrary or additional facts.

[26 FR 6513, July 20, 1961, as amended at 55 FR 12120, Mar. 30, 1990]



Sec. 511.3  Composition and appointment of committees.

    An industry committee will be composed of residents of American 
Samoa and residents of the United States outside of American Samoa. The 
Secretary will appoint as members of each committee an equal number of 
persons representing:
    (a) The public,
    (b) Employees in the industry, and
    (c) Employers in the industry.

[[Page 93]]


The public members shall be disinterested, and the Secretary will 
designate one as chairperson. For purposes of this section only, the 
definition of the industry shall be considered to include all such 
industry throughout the United States, its territories and possessions.

[55 FR 53298, Dec. 28, 1990]



Sec. 511.4  Compensation of committee members.

    Each member of an industry committee will be allowed per diem 
compensation at the rate specified in Chapter 304 of the Department of 
Labor Supplement to the Federal Personnel Manual for each day actually 
spent in the work of the committee, and will, in addition, be reimbursed 
for necessary transportation and other expenses incident to traveling in 
accordance with Standard Government Travel Regulations then in effect. 
All travel expenses will be paid on travel vouchers certified by the 
Administrator or an authorized representative. Any other necessary 
expenses that are incidental to the work of the committee may be 
incurred by the committee upon approval of, and shall be paid upon, 
certification of the Administrator or an authorized representative.

[58 FR 34524, June 28, 1993]



Sec. 511.5  Vacancies and dissolution of committees.

    The Secretary will appoint persons to fill any vacancies occurring 
in industry committees. If an industry committee is unable to arrive at 
a recommendation within a reasonable time, or refuses to make a 
recommendation, it may be dissolved by the Secretary. An industry 
committee shall cease to perform further functions when it has filed 
with the Administrator its report containing its findings of fact and 
recommendations with respect to the matters referred to it, and shall 
not again perform any functions with respect to any matter reported on, 
unless and until directed by the Administrator. An industry committee 
shall be dissolved automatically when its recommendations are no longer 
subject to review under section 10 of the Act.

[27 FR 10651, Nov. 1, 1962]



Sec. 511.6  Investigation.

    The Administrator shall prepare an economic report containing such 
data as can be assembled pertinent to the matters to be referred to a 
committee. A copy of these regulations will be sent to all members of 
the committee following their appointment, and a copy of the economic 
report when completed will be furnished promptly. Before making its 
report the committee will decide whether it will conduct any further 
investigation, apart from the hearing and the review of the economic 
report, in connection with the matters referred to it.

[55 FR 53298, Dec. 28, 1990]



Sec. 511.7  Committee staff.

    Each industry committee will be furnished a lawyer, to serve as 
committee counsel, and an economist, to serve as committee economist. 
Committee counsel shall advise the committee on the issues of law, 
including interpretations of these regulations and the legal scope of 
the committee's discretion, which arise during the committee 
proceedings. The committee counsel and economist shall be available to 
advise and assist the committee at all of its meetings. The 
Administrator shall furnish the committee with adequate stenographic, 
clerical, and other assistance.



Sec. 511.8  Prehearing statements.

    (a) Every employer, employee, trade association, trade union, or 
group of employers, employees, associations, or unions in the industry 
as defined, or in such industry elsewhere in the United States, and 
every other person who, in the judgment of the committee has an interest 
sufficient to justify the participation proposed by such party, shall be 
considered an interested person. No member of the committee may 
participate as an interested person.
    (b) Any interested person who wishes to participate on his or her 
own behalf or by counsel shall file a written prehearing statement 
within such period of time as may be prescribed in a notice of hearing, 
or other notice published in the Federal Register. The number of copies 
of such statements and the time and places for filing them

[[Page 94]]

will be specified in notices of hearings. The prehearing statement shall 
describe the person's interest in the proceeding and shall contain:
    (1) The prepared statement he or she proposes to give, if any;
    (2) A statement of the individual classifications and minimum wage 
rates, if any, he or she proposes to support;
    (3) The written data he or she proposes to introduce in evidence, 
including all tangible objective data to be submitted pursuant to 
Sec. 511.13;
    (4) The names and addresses of the witnesses he or she proposes to 
call and a summary of the evidence he or she proposes to develop;
    (5) The name and address of the individual who will present his or 
her case; and
    (6) A statement of the approximate length of time his or her case 
will take.

If the prehearing statement is in conformity with the above 
requirements, the person shall have the right to participate as a party. 
In accordance with section 6(c) of the Administrative Procedure Act, the 
industry committee shall, after considering the advice of committee 
counsel, issue subpoenas, authorized by section 9 of the Fair Labor 
Standards Act of 1938, to parties who make a request therefor 
accompanied by a clear showing of general relevance and reasonable scope 
of the evidence sought.
    (c) Prehearing statements of parties shall be made available for 
examination at the offices where they are filed. Each person who files a 
prehearing statement should, if requested, make himself or herself 
available for conference with the committee staff to make any needed 
clarification of his or her prehearing statement, and arrange details of 
presenting his or her testimony or case.
    (d) In exceptional circumstances a person who has not filed the 
prehearing statement required by this section and who does not appear on 
a witness list filed by a party may nevertheless be permitted, in the 
discretion of the committee, to offer testimony.

[25 FR 14024, Dec. 31, 1960, as amended at 55 FR 53298, Dec. 28, 1990]



Sec. 511.9  Requirements for quorum and decisions.

    Two-thirds of the members of an industry committee shall constitute 
a quorum. Approval by a majority of all of the members of an industry 
committee or subcommittee shall be required for its report. Except as 
otherwise provided in this part, the chairperson of the industry 
committee or subcommittee may make other decisions for the committee or 
subcommittee, but each such decision shall be subject to approval of a 
majority of the members present if any member objects.

[55 FR 53298, Dec. 28, 1990]



Sec. 511.10  Subjects and issues.

    (a) The declared policy of the Act with respect to industries or 
enterprises in American Samoa engaged in commerce or in the production 
of goods for commerce is to reach as rapidly as is economically feasible 
without substantially curtailing employment the object of the minimum 
wage rate that would apply in each such industry under paragraph (1) of 
section 6(a) but for section 6(a)(3) of the Act. Each industry committee 
shall recommend to the Administrator the highest minimum wage rates for 
the industry that it determines, having due regard to economic and 
competitive conditions, will not substantially curtail employment in the 
industry and will not give any industry in American Samoa a competitive 
advantage over any industry in the United States outside of American 
Samoa; except that the committee shall recommend to the Secretary the 
minimum wage rate prescribed in section 6(a)(1), that would be 
applicable but for section 6(a)(3), unless there is evidence in the 
record that establishes that the industry, or a predominant portion 
thereof, is unable to pay that wage due to such economic and competitive 
conditions.
    (b) Whenever the industry committee finds that a higher minimum wage 
may be determined for employees engaged in certain activities or in the 
manufacture of certain products in the industry than may be determined 
for other employees in the industry, the industry

[[Page 95]]

committee shall recommend such reasonable classifications within the 
industry as it determines to be necessary for the purpose of fixing for 
each classification the highest minimum wage rate (not in excess of that 
prescribed in paragraph (1) of section 6(a) of the Act) that can be 
determined for it under the principles set out in this section that will 
not substantially curtail employment in such classification and will not 
give a competitive advantage to any group in that industry. No 
classification shall be made, however, and no minimum wage rate shall be 
fixed solely on a regional basis or on the basis of age or sex. In 
determining whether there should be classifications within an industry, 
in making such classifications, and in determining the minimum wage rate 
for each classification, the committee shall consider, among other 
relevant factors, the following:
    (1) Competitive conditions as affected by transportation, living and 
production costs;
    (2) The wages established for work of like or comparable character 
by collective labor agreements negotiated between employers and 
employees by representatives of their own choosing; and
    (3) The wages paid for work of like or comparable character by 
employers who voluntarily maintain minimum wage standards in the 
industry.

[55 FR 53298, Dec. 28, 1990]



Sec. 511.11  Pertinent data.

    Among the types of data which may be considered pertinent to the 
subjects and issues delineated in Sec. 511.10, are those revealing:
    (a) Employment and labor conditions and trends in American Samoa, 
and on the mainland, particularly since the promulgation of the 
presently applicable wage order, including such items as present and 
past employment, present wage rates and fringe benefits, changes in 
average hourly earnings or wage structure, provisions of collective 
bargaining agreements, hours of work, labor turnover, absenteeism, 
productivity, learning periods, rejection rates, and similar factors;
    (b) Market conditions and trends in American Samoa, and on the 
mainland, including changes in the volume and value of production, 
market outlets, price changes, style factors, consumer demand, 
competitive relationships, tariff rates, and similar marketing factors;
    (c) Comparative production costs in American Samoa, on the mainland, 
and in foreign countries, together with the factors responsible for 
differences;
    (d) Financial conditions and trends since promulgation of the 
present wage order as reflected in profit and loss statements and 
balance sheets; and
    (e) Data bearing on proper definitions of classifications within an 
industry.

[55 FR 12120, Mar. 30, 1990]



Sec. 511.12  Committee and subcommittee meetings.

    (a) The full committee, or a quorum thereof, will convene at the 
time and place appointed for an initial prehearing meeting as provided 
in the Secretary's order initiating the proceedings (note Sec. 511.2). 
The full committee acting through a quorum will decide at that meeting 
whether it will preside at the reception at the hearing or will 
authorize a subcommittee to preside. Any resolution authorizing a 
subcommittee to hold the hearing shall provide a period of 30 days 
after:
    (1) The subcommittee has filed its recommended report and
    (2) A transcript of the subcommittee hearing is made available to 
the parties, for the parties to file exceptions to the recommended 
report, and the committee shall meet promptly thereafter on call of its 
chairperson or the Administrator to consider exceptions and prepare its 
final report.
    (b) A committee may adjourn its meeting or hearing, or both, from 
time to time, and meet again, at hearing or otherwise, pursuant to the 
terms of adjournment, or on call of its chairperson or the 
Administrator.

[55 FR 53299, Dec. 28, 1990]



Sec. 511.13  Evidence.

    In accordance with the notice of hearing, the committee and any 
authorized subcommittee will take official notice of the facts stated in 
the economic report to the extent they are not refuted by evidence 
received at the hearing. Other pertinent evidence available to the 
Department of Labor

[[Page 96]]

may be presented at the hearing. The committee itself may call witnesses 
not otherwise scheduled to testify. Oral or documentary evidence may be 
received, but the committee shall exclude irrelevant, immaterial, and 
unduly repetitious evidence. Every interested person who has met the 
requirements for participation as a party shall have the right to 
present his or her case by oral or documentary evidence, to submit 
rebuttal evidence, and to conduct such cross-examination of witnesses 
called by others as may be required for a full and true disclosure of 
the facts. Testimony on behalf of an employer or group of employers as 
to inability to pay the minimum wage rate specified in paragraph (1) of 
section 6(a) of the Act, or as to inability to adjust to a higher 
minimum wage rate than prescribed by any applicable wage order of the 
Secretary, shall be supported by tangible objective data filed as part 
of the prehearing statement under Sec. 511.8. Financial or other data 
shall include data for the most recent year or fraction thereof for 
which data are available. Financial statements filed in accordance with 
this provision, except those relating to a period of less than a full 
fiscal year or a fiscal year ending less than 90 days prior to the 
filing of the prehearing statement, shall be certified by an independent 
public accountant or shall be sworn to conform to and be consistent with 
the corresponding income tax returns covering the same years. Evidence 
of witnesses not present at the hearing may be submitted only by 
affidavits received with, or as a part of, a prehearing statement that 
meets the requirements of Sec. 511.8 and satisfactorily explains why 
each affiant cannot be present. Such affidavits will be received in 
evidence to the same extent that testimony from affiants would have been 
admitted had they been present. The committee will give such weight to 
these statements as it considers appropriate, and the fact that such 
affiants have not been subject to cross-examination may be considered, 
along with other relevant facts, in assessing the weight to be given 
such evidence.

[55 FR 53299, Dec. 28, 1990]



Sec. 511.14  Procedure for receiving evidence.

    (a) All testimony shall be given under oath or affirmation. Any 
party shall have the right to appear in person, by counsel, or by other 
specified representative. Misconduct at any hearing shall be grounds for 
summary exclusion from the hearing. The committee shall limit the 
testimony of any witness where appropriate to prevent the hearing from 
becoming unduly prolonged. The refusal of a witness to answer any 
question which has been ruled to be proper shall, in the discretion of 
the committee, be ground for striking all testimony given by the witness 
on related matters.
    (b) Unless otherwise directed by the committee, witnesses shall be 
called in the following order: The committee economist qualified to 
testify concerning the content and preparation of the economic report, 
other witnesses called by the Department of Labor, witnesses called by 
the parties, other witnesses. Unless otherwise directed by the 
committee, all witnesses other than those called by the parties shall be 
examined in the following order: By committee counsel, by committee 
economist, by committee members, by the parties or their 
representatives. Witnesses called by the parties shall be examined first 
by the party calling them or by the party's specified representative, 
and then in the order herein indicated for all other witnesses. Redirect 
examination may be permitted at the discretion of the committee. 
Rebuttal evidence may be offered in the order and manner in this section 
provided for other evidence. To the extent not specified in this 
section, the order for calling and examining witnesses shall be 
specified by the chairperson of the committee or subcommittee.

[21 FR 7669, Oct. 6, 1956, as amended at 55 FR 53299, Dec. 28, 1990]



Sec. 511.15  Submittals prior to reports.

    As soon as the receipt of evidence is concluded, a committee or 
subcommittee presiding at a hearing shall receive any proposed findings 
of fact and recommendations together with the reasons therefor submitted 
by any party. These submittals shall be oral

[[Page 97]]

unless otherwise directed by the committee or subcommittee. If, in the 
discretion of the committee or subcommittee such proposals should be in 
writing, it may grant such additional time as it deems essential.



Sec. 511.16  Reports.

    Promptly after receipt of submissions under Sec. 511.15, the 
committee or subcommittee will resolve the issues before it and prepare 
a report containing its findings of fact and recommendations. The report 
shall contain the committee's or the subcommittee's findings and 
conclusions as well as the reasons or basis therefor upon all the 
material issues of fact, law, or discretion presented on the record. 
When a committee, acting through a quorum, has presided at the reception 
of evidence, this report shall be its final report on the matters 
referred to it. Where, however, a subcommittee has presided at the 
reception of evidence, this report shall be an initial report, and the 
committee shall meet thereafter to review the report and rule on 
exceptions in its final report. Where the committee presides at the 
reception of evidence and proceeds to final decision, every party shall 
be regarded as having objected to any wage rate or classification at 
variance with any the party proposed in the party's prehearing 
statements unless the party accepted such a rate or classification in 
any submittal made pursuant to Sec. 511.15. A copy of the report shall 
be signed by each member of the committee who approves it, either at a 
meeting of the committee or by circulation of one or more copies among 
the members of the committee. At any time within 3 days after the 
committee report is signed by those who approve it, members dissenting 
therefrom may collectively or individually submit signed reports stating 
the reasons for their dissent.

[55 FR 53299, Dec. 28, 1990]



Sec. 511.17  Records.

    Each industry committee shall keep a journal recording the time and 
place of all its meetings, the members present, the votes, and other 
formal proceedings, including the appointment of subcommittees. 
Subcommittees shall keep a similar journal. No report of committee or 
subcommittee discussions need be included. All hearings shall be 
recorded. The record of any hearing before any subcommittee shall be 
transcribed. All hearings before a committee shall also be transcribed 
in whole or in part whenever the Administrator so directs upon his or 
her own motion or upon the motion of any party or any person compelled 
to submit data or evidence and upon the payment of costs prescribed by 
the Administrator. Promptly after completion of the committee's final 
report, the committee chairperson shall certify the report and transmit 
it to the Administrator. As soon as practicable thereafter, the 
committee staff shall transmit to the Administrator:
    (a) All committee and subcommittee journals;
    (b) All applications for leave to participate as parties together 
with the record of action thereon; and,
    (c) The record, including any transcript of the testimony and 
exhibits, together with all papers and requests filed in the 
proceedings.

These documents shall be available for inspections and copying by 
interested persons at the Office of the Administrator during usual 
business hours.

[55 FR 53300, Dec. 28, 1990]



Sec. 511.18  Publication and effective date of wage order.

    Promptly after receipt of the committee report the Administrator 
shall publish the committee recommendations in the Federal Register and 
shall provide by order that the recommendations contained in such report 
shall take effect upon the expiration of 15 days after the date of such 
publication.



Sec. 511.19  Petitions.

    Any interested person may at any time file a petition with the 
Administrator for an amendment to the regulations contained in this part 
or for an amendment to a wage order applicable to that person. In view 
of the statutory requirement that the minimum rates of wages established 
by order under section 6 of the Act be reviewed by an industry committee 
at least biennially, substantial cause must be shown in

[[Page 98]]

support of any petition for an amendment of a wage order out of regular 
course. Any interested person may also file a petition at any time with 
the Administrator for a public hearing under section 13(e) of the Act to 
determine whether economic conditions warrant rules or regulations 
providing reasonable limitations or allowing reasonable variations, 
tolerances, or exemptions to or from any or all of the provisions of 
section 7 of the Act with respect to employees in American Samoa for 
whom the Secretary of Labor has established minimum wage rates under 
section 6(a)(3) of the Act and the regulations contained in this part. 
Whenever it appears to the Secretary of Labor, by reason of such a 
petition or otherwise, to be probable that such a hearing is likely to 
reveal that economic conditions warrant such action, notice of such 
hearing specifying the procedure to be followed will be published in the 
Federal Register.

[55 FR 53300, Dec. 28, 1990]



PART 515--UTILIZATION OF STATE AGENCIES FOR INVESTIGATIONS AND INSPECTIONS--
Table of Contents




Sec.
515.1  Definitions.
515.2  Agreements with State agencies.
515.3  Qualifications of the State agency.
515.4  Submission of plan.
515.5  Additional requirements.
515.6  Audits.
515.7  Transmission of official mail.
515.8  Enforcement.
515.9  Agreements and approved plans.
515.10  Amendments and repeal.

    Authority: Sec. 4, 49 Stat. 2038, sec. 11(b), 52 Stat. 1066; 29 
U.S.C. 211(b), 41 U.S.C. 38.

    Source: 13 FR 2161, 2163, Apr. 22, 1948, unless otherwise noted.



Sec. 515.1  Definitions.

    As used in this part:
    (a) Acts. The term Acts means the Fair Labor Standards Act of 1938 
(Act of June 25, 1938; Chapter 676, 52 Stat. 1060, 29 U.S.C. 201) and 
the Public Contracts Act (Act of June 30, 1936; 49 Stat. 2036; 41 U.S.C. 
35-45).
    (b) Administrator. The term Administrator means the Administrator of 
the Wage and Hour Division of the United States Department of Labor.
    (c) Division. The term Division means the Wage and Hour Division of 
the United States Department of Labor.
    (d) State. The term State means any State of the United States or 
the District of Columbia or any Territory or possession of the United 
States.
    (e) State agency. The term State agency means the agency in the 
State charged with the administration of labor laws which necessitate 
inspection of places of employment for (1) enforcement of State child-
labor regulations and (2) enforcement of State maximum-hour or State 
minimum-wage regulations.
    (f) Official forms. The term official forms means forms prescribed 
by the Administrator or the Secretary of Labor.



Sec. 515.2  Agreements with State agencies.

    (a) Purpose. The Secretary and the Administrator may enter into 
agreements with State agencies for the utilization of services of State 
and local agencies and their employees in making investigations and 
inspections under the Acts and for reimbursement therefor, when such 
State agencies have submitted plans of cooperation for such purposes and 
such plans have been found to be reasonably appropriate and adequate to 
carry out the respective functions of the Secretary and the 
Administrator.
    (b) Certificates of attorneys general. No such agreement shall 
become effective and operative until a statement of the Attorney General 
of the State, or, if the Attorney General is not authorized to make such 
a statement, the State official who is so authorized, has been received 
by the Division and the Secretary of Labor certifying that the agreement 
is valid in the form as executed under the laws of the State.



Sec. 515.3  Qualifications of the State agency.

    The State agency shall have as its primary function the 
administration of State labor laws and shall be under the direction of 
an executive who gives full time to the work of the agency. The agency 
shall be engaged in inspecting

[[Page 99]]

places of employment for (a) enforcement of State child-labor laws and 
regulations, and (b) enforcement of State maximum hour or minimum-wage 
laws and regulations. An administrative division of the State agency 
shall be designated to make investigations and inspections under the 
Acts; qualified staff, under adequate supervision, shall be specifically 
assigned for work connected with State and Federal child-labor, maximum-
hour and minimum-wage laws and regulations; and provision shall be made 
to inspect any establishment subject to the Acts.



Sec. 515.4  Submission of plan.

    The State agency shall submit a plan, in quadruplicate, which shall 
include the following:
    (a) A copy of the Act establishing the State agency, copies of the 
laws administered by the State agency, and if there is an act 
specifically authorizing the State to cooperate with the Division or the 
Secretary of Labor, or both, a copy of such Act.
    (b) A description of the organization of the State agency, 
illustrated by organization charts, showing the delegation of 
responsibility and lines of authority to be followed within the agency 
in the enforcement of the act and State labor laws.
    (c) A description: (1) Of the manner in which investigations and 
inspections under the Acts will be coordinated with the investigations 
and inspections for enforcement of State child-labor, maximum-hour and 
minimum-wage laws and regulations; (2) of the location of offices of the 
administrative division designated to make inspections under the Acts, 
with the job titles of employees located in each such office and 
employees assigned to work in connection with the Acts so designated; 
and (3) of the manner in which the work of inspectors will be 
supervised.
    (d) Provisions for the establishment and maintenance of personnel 
administration, with respect to personnel engaged in work under the Acts 
for the Division and the Secretary of Labor in accordance with the 
following standards:
    (1) Job classifications based upon an analysis of the duties and 
responsibilities of positions;
    (2) A compensation schedule adjusted to State salary schedules for 
similar positions: Provided, however, That all salaries paid by the 
State for services rendered in accordance with an agreement entered into 
pursuant to Sec. 515.2 shall be on the basis of applicable State laws or 
regulations, or in the absence of such applicable laws or regulations, 
on the approved and usual scale pair by the State for similar services 
and shall in no case exceed salaries paid for comparable Federal 
positions in the competitive classified service. Allowances for 
necessary traveling expenses shall be on the basis of State laws and 
regulations governing travel allowances;
    (3) Assignment of personnel to Federal work only when their 
qualifications conform substantially with qualifications of Federal 
employees engaged in similar work, such assignment to be made only after 
submission to and approval by the Division and the Secretary of Labor of 
a statement of the training and experience of each person who will 
engage in Federal work;
    (4) Appointment of new personnel on the basis of merit, either (i) 
from lists of eligible persons certified in the order of merit, secured 
under a merit system through State-wide competitive examinations which 
prescribe requirements of training and experience in substantial 
conformity with Federal civil service requirements for similar positions 
or (ii) from lists taken from Federal registers established through 
competitive examinations for similar positions, it being understood that 
such registers may be broken down by States;
    (5) Adequate training of staff;
    (6) Promotion on the basis of qualifications and performance;
    (7) Security of tenure assured satisfactory employees, including 
right of notice and hearing prior to demotion or dismissal;
    (8) Prohibition against employees engaging in political activities 
other than the exercise of their right to vote and to express privately 
their opinions on political questions.
    (e) A budget which shall show, in detail, estimated expenditures by 
the State agency on behalf of the Division and the Secretary of Labor 
for services to be rendered in connection with the

[[Page 100]]

administration of the Acts and a budget which shall show estimated 
expenditure for the enforcement of comparable State laws and regulations 
during the period covered by the agreement; a statement showing funds 
appropriated to or allocated for meeting the budget for estimated State 
expenditures; and a statement showing expenditures by the State agency 
for the enforcement of comparable State laws and regulations during the 
last fiscal year.
    (f) A statement of State requirements in regard to fiscal practices 
and to appointment of personnel, together with copies of the laws and 
regulations setting forth such requirements.
    (g) A statement from the Attorney General of the State or, if the 
Attorney General is not authorized to make such a statement, from the 
State official who is so authorized certifying that the State agency has 
authority to enter into an Agreement with the Division and the Secretary 
of Labor in accordance with this part.



Sec. 515.5  Additional requirements.

    (a) The State Agency shall follow the procedure set forth in the 
Inspection Manual for the enforcement of the act and such supplements to 
or provisions thereof as may be issued from time to time by the Division 
or the Secretary of Labor; use official forms for recording findings; 
make reports as required; and carry on the work connected with the 
administration of the Acts in conformity with the plans and budget 
agreed upon and with the instructions and policies of the Division and 
the Secretary of Labor.
    (b) Representatives of the Division and the Secretary of Labor may 
at any time, upon notifying the State agency, make such inspections and 
investigations and secure such information as may be necessary for the 
administration of the Acts.



Sec. 515.6  Audits.

    The accounting records and the supporting data pertaining to 
expenditures for investigations and inspections under the Acts shall be 
subject to audit by the Division and the Secretary of Labor, annually, 
or so often as the Administrator and the Secretary of Labor, may 
require.



Sec. 515.7  Transmission of official mail.

    Subject to the requirements of law and of the regulations of the 
Post Office Department, franked self-addressed envelopes may be used for 
communications from the field staff to a State official designated by 
the Division and the Secretary of Labor, and for communication from the 
State agency to the Division or the Secretary of Labor.



Sec. 515.8  Enforcement.

    All litigation relating to the enforcement of the Acts, other than 
civil actions for the recovery of wages due instituted pursuant to 
section 16(b) of the Fair Labor Standards Act of 1938 and all 
administrative proceedings instituted pursuant to section 5 of the 
Public Contracts Act shall be undertaken by and be under the direction 
and control of the Federal Government. Any State agency intending to 
institute a civil action in behalf of an employee or employees for the 
recovery of wages due, pursuant to section 16(b) of the Fair Labor 
Standards Act of 1938 shall notify the Division and the Secretary of 
Labor prior to the institution of such action.



Sec. 515.9  Agreements and approved plans.

    Agreements and approved plans incorporated therein may be amended 
upon the consent of the parties thereto.



Sec. 515.10  Amendments and repeal.

    This part may be amended or repealed by appropriate joint 
regulations issued by the Secretary of Labor and the Administrator: 
Provided, however, That no such amendment or repeal shall be effective 
as to any agreement previously entered into by a State agency without 
its consent thereto.



PART 516--RECORDS TO BE KEPT BY EMPLOYERS--Table of Contents




                              Introductory

Sec.
516.0  Display of OMB control numbers.
516.1  Form of records; scope of regulations.

[[Page 101]]

                     Subpart A--General Requirements

516.2  Employees subject to minimum wage or minimum wage and overtime 
          provisions pursuant to section 6 or sections 6 and 7(a) of the 
          Act.
516.3  Bona fide executive, administrative, and professional employees 
          (including academic administrative personnel and teachers in 
          elementary or secondary schools), and outside sales employees 
          employed pursuant to section 13(a)(1) of the Act.
516.4  Posting of notices.
516.5  Records to be preserved 3 years.
516.6  Records to be preserved 2 years.
516.7  Place for keeping records and their availability for inspection.
516.8  Computations and reports.
516.9  Petitions for exceptions.
516.10  [Reserved]

  Subpart B--Records Pertaining to Employees Subject to Miscellaneous 
          Exemptions Under the Act; Other Special Requirements

516.11  Employees exempt from both minimum wage and overtime pay 
          requirements under section 13(a) (2), (3), (4), (5), (8), 
          (10), (12) or 13(d) of the Act.
516.12  Employees exempt from overtime pay requirements pursuant to 
          section 13(b) (1), (2), (3), (5), (9), (10), (15), (16), (17), 
          (20), (21), (24), (27) or (28) of the Act.
516.13  Livestock auction employees exempt from overtime pay 
          requirements under section 13(b)(13) of the Act.
516.14  Country elevator employees exempt from overtime pay requirements 
          under section 13(b)(14) of the Act.
516.15  Local delivery employees exempt from overtime pay requirements 
          pursuant to section 13(b)(11) of the Act.
516.16  Commission employees of a retail or service establishment exempt 
          from overtime pay requirements pursuant to section 7(i) of the 
          Act.
516.17  Seamen exempt from overtime pay requirements pursuant to section 
          13(b)(6) of the Act.
516.18  Employees employed in certain tobacco, cotton, sugar cane or 
          sugar beet services, who are partially exempt from overtime 
          pay requirements pursuant to section 7(m), 13(h), 13(i) or 
          13(j) of the Act.
516.19  [Reserved]
516.20  Employees under certain collective bargaining agreements who are 
          partially exempt from overtime pay requirements as provided in 
          section 7(b)(1) or section 7(b)(2) of the Act.
516.21  Bulk petroleum employees partially exempt from overtime pay 
          requirements pursuant to section 7(b)(3) of the Act.
516.22  Employees engaged in charter activities of carriers pursuant to 
          section 7(n) of the Act.
516.23  Employees of hospitals and residential care facilities 
          compensated for overtime work on the basis of a 14-day work 
          period pursuant to section 7(j) of the Act.
516.24  Employees employed under section 7(f) ``Belo'' contracts.
516.25  Employees paid for overtime on the basis of ``applicable'' rates 
          provided in sections 7(g)(1) and 7(g)(2) of the Act.
516.26  Employees paid for overtime at premium rates computed on a 
          ``basic'' rate authorized in accordance with section 7(g)(3) 
          of the Act.
516.27  ``Board, lodging, or other facilities'' under section 3(m) of 
          the Act.
516.28  Tipped employees.
516.29  Employees employed by a private entity operating an amusement or 
          recreational establishment located in a national park or 
          national forest or on land in the National Wildlife Refuge 
          System who are partially exempt from overtime pay requirements 
          pursuant to section 13(b)(29) of the Act.
516.30  Learners, apprentices, messengers, students, or handicapped 
          workers employed under special certificates as provided in 
          section 14 of the Act.
516.31  Industrial homeworkers.
516.32  [Reserved]
516.33  Employees employed in agriculture pursuant to section 13(a)(6) 
          or 13(b)(12) of the Act.
516.34  Exemption from overtime pay for time spent by certain employees 
          receiving remedial education pursuant to section 7(q) of the 
          Act.

    Authority: Sec. 11, 52 Stat. 1066, as amended, 29 U.S.C. 211. 
Section 516.33 also issued under 52 Stat. 1060, as amended; 29 U.S.C. 
201 et seq. Section 516.34 also issued under Sec. 7, 103 Stat. 944, 29 
U.S.C. 207(q).

    Source: 52 FR 24896, July 1, 1987, unless otherwise noted.

                              Introductory



Sec. 516.0  Display of OMB control numbers.

------------------------------------------------------------------------
                                                              Currently
Subpart or section where information collection requirement    assigned
                         is located                          OMB control
                                                                 No.
------------------------------------------------------------------------
Subpart A (except 516.8)...................................    1215.0017
516.8......................................................    1215.0006
Subpart B (except 516.31)..................................    1215.0017
516.31.....................................................    1215.0013
------------------------------------------------------------------------


[[Page 102]]



Sec. 516.1  Form of records; scope of regulations.

    (a) Form of records. No particular order or form of records is 
prescribed by the regulations in this part. However, every employer 
subject to any provisions of the Fair Labor Standards Act of 1938, as 
amended (hereinafter referred to as the ``Act''), is required to 
maintain records containing the information and data required by the 
specific sections of this part. The records may be maintained and 
preserved on microfilm or other basic source document of an automatic 
word or data processing memory provided that adequate projection or 
viewing equipment is available, that the reproductions are clear and 
identifiable by date or pay period and that extensions or transcriptions 
of the information required by this part are made available upon 
request.
    (b) Scope of regulations. The regulations in this part are divided 
into two subparts.
    (1) Subpart A of this part contains the requirements generally 
applicable to all employers employing covered employees, including the 
requirements relating to the posting of notices, the preservation and 
location of records, and the recordkeeping requirements for employers of 
employees to whom both the minimum wage provisions of section 6 or the 
minimum wage provisions of section 6 and the overtime pay provisions of 
section 7(a) of the Act apply. In addition, Sec. 516.3 contains the 
requirements relating to executive, administrative, and professional 
employees (including academic administrative personnel or teachers in 
elementary or secondary schools), and outside sales employees.
    (2) Subpart B of this part deals with the information and data which 
must be kept for employees (other than executive, administrative, etc., 
employees) who are subject to any of the exemptions provided in the Act. 
This section also specifies the records needed for deductions from and 
additions to wages for ``board, lodging, or other facilities,'' 
industrial homeworkers and employees whose tips are credited toward 
wages. The sections in subpart B of this part require the recording of 
more, less, or different items of information or data than required 
under the generally applicable recordkeeping requirements of subpart A.
    (c) Relationship to other recordkeeping and reporting requirements. 
Nothing in 29 CFR part 516 shall excuse any party from complying with 
any recordkeeping or reporting requirement imposed by any other Federal, 
State or local law, ordinance, regulation or rule.



                     Subpart A--General Requirements



Sec. 516.2  Employees subject to minimum wage or minimum wage and overtime provisions pursuant to section 6 or sections 6 and 7(a) of the Act.

    (a) Items required. Every employer shall maintain and preserve 
payroll or other records containing the following information and data 
with respect to each employee to whom section 6 or both sections 6 and 
7(a) of the Act apply:
    (1) Name in full, as used for Social Security recordkeeping 
purposes, and on the same record, the employee's identifying symbol or 
number if such is used in place of name on any time, work, or payroll 
records,
    (2) Home address, including zip code,
    (3) Date of birth, if under 19,
    (4) Sex and occupation in which employed (sex may be indicated by 
use of the prefixes Mr., Mrs., Miss., or Ms.) (Employee's sex 
identification is related to the equal pay provisions of the Act which 
are administered by the Equal Employment Opportunity Commission. Other 
equal pay recordkeeping requirements are contained in 29 CFR part 1620.)
    (5) Time of day and day of week on which the employee's workweek 
begins (or for employees employed under section 7(k) of the Act, the 
starting time and length of each employee's work period). If the 
employee is part of a workforce or employed in or by an establishment 
all of whose workers have a workweek beginning at the same time on the 
same day, a single notation of the time of the day and beginning day of 
the workweek for the whole workforce or establishment will suffice,
    (6)(i) Regular hourly rate of pay for any workweek in which overtime 
compensation is due under section 7(a) of

[[Page 103]]

the Act, (ii) explain basis of pay by indicating the monetary amount 
paid on a per hour, per day, per week, per piece, commission on sales, 
or other basis, and (iii) the amount and nature of each payment which, 
pursuant to section 7(e) of the Act, is excluded from the ``regular 
rate'' (these records may be in the form of vouchers or other payment 
data),
    (7) Hours worked each workday and total hours worked each workweek 
(for purposes of this section, a ``workday'' is any fixed period of 24 
consecutive hours and a ``workweek'' is any fixed and regularly 
recurring period of 7 consecutive workdays),
    (8) Total daily or weekly straight-time earnings or wages due for 
hours worked during the workday or workweek, exclusive of premium 
overtime compensation,
    (9) Total premium pay for overtime hours. This amount excludes the 
straight-time earnings for overtime hours recorded under paragraph 
(a)(8) of this section,
    (10) Total additions to or deductions from wages paid each pay 
period including employee purchase orders or wage assignments. Also, in 
individual employee records, the dates, amounts, and nature of the items 
which make up the total additions and deductions,
    (11) Total wages paid each pay period,
    (12) Date of payment and the pay period covered by payment.
    (b) Records of retroactive payment of wages. Every employer who 
makes retroactive payment of wages or compensation under the supervision 
of the Administrator of the Wage and Hour Division pursuant to section 
16(c) and/or section 17 of the Act, shall:
    (1) Record and preserve, as an entry on the pay records, the amount 
of such payment to each employee, the period covered by such payment, 
and the date of payment.
    (2) Prepare a report of each such payment on a receipt form provided 
by or authorized by the Wage and Hour Division, and (i) preserve a copy 
as part of the records, (ii) deliver a copy to the employee, and (iii) 
file the original, as evidence of payment by the employer and receipt by 
the employee, with the Administrator or an authorized representative 
within 10 days after payment is made.
    (c) Employees working on fixed schedules. With respect to employees 
working on fixed schedules, an employer may maintain records showing 
instead of the hours worked each day and each workweek as required by 
paragraph (a)(7) of this section, the schedule of daily and weekly hours 
the employee normally works. Also,
    (1) In weeks in which an employee adheres to this schedule, 
indicates by check mark, statement or other method that such hours were 
in fact actually worked by him, and
    (2) In weeks in which more or less than the scheduled hours are 
worked, shows that exact number of hours worked each day and each week.




Sec. 516.3  Bona fide executive, administrative, and professional employees 
(including academic administrative personnel and teachers in elementary or 
secondary 
          schools), and outside sales employees employed pursuant to 
          section 13(a)(1) of the Act.

    With respect to each employee in a bona fide executive, 
administrative, or professional capacity (including employees employed 
in the capacity of academic administrative personnel or teachers in 
elementary or secondary schools), or in outside sales, as defined in 
part 541 of this chapter (pertaining to so-called ``white collar'' 
employee exemptions), employers shall maintain and preserve records 
containing all the information and data required by Sec. 516.2(a) except 
paragraphs (a) (6) through (10) and, in addition, the basis on which 
wages are paid in sufficient detail to permit calculation for each pay 
period of the employee's total remuneration for employment including 
fringe benefits and prerequisites. (This may be shown as the dollar 
amount of earnings per month, per week, per month plus commissions, etc. 
with appropriate addenda such as ``plus hospitalization and insurance 
plan A,'' ``benefit package B,'' ``2 weeks paid vacation,'' etc.)



Sec. 516.4  Posting of notices.

    Every employer employing any employees subject to the Act's minimum 
wage provisions shall post and keep posted a notice explaining the Act, 
as

[[Page 104]]

prescribed by the Wage and Hour Division, in conspicuous places in every 
establishment where such employees are employed so as to permit them to 
observe readily a copy. Any employer of employees to whom section 7 of 
the Act does not apply because of an exemption of broad application to 
an establishment may alter or modify the poster with a legible notation 
to show that the overtime provisions do not apply. For example:

Overtime Provisions Not Applicable to Taxicab Drivers (section 
13(b)(17)).



Sec. 516.5  Records to be preserved 3 years.

    Each employer shall preserve for at least 3 years:
    (a) Payroll records. From the last date of entry, all payroll or 
other records containing the employee information and data required 
under any of the applicable sections of this part, and
    (b) Certificates, agreements, plans, notices, etc. From their last 
effective date, all written:
    (1) Collective bargaining agreements relied upon for the exclusion 
of certain costs under section 3(m) of the Act,
    (2) Collective bargaining agreements, under section 7(b)(1) or 
7(b)(2) of the Act, and any amendments or additions thereto,
    (3) Plans, trusts, employment contracts, and collective bargaining 
agreements under section 7(e) of the Act,
    (4) Individual contracts or collective bargaining agreements under 
section 7(f) of the Act. Where such contracts or agreements are not in 
writing, a written memorandum summarizing the terms of each such 
contract or agreement,
    (5) Written agreements or memoranda summarizing the terms of oral 
agreements or understandings under section 7(g) or 7(j) of the Act, and
    (6) Certificates and notices listed or named in any applicable 
section of this part.
    (c) Sales and purchase records. A record of (1) total dollar volume 
of sales or business, and (2) total volume of goods purchased or 
received during such periods (weekly, monthly, quarterly, etc.), in such 
form as the employer maintains records in the ordinary course of 
business.



Sec. 516.6  Records to be preserved 2 years.

    (a) Supplementary basic records: Each employer required to maintain 
records under this part shall preserve for a period of at least 2 years.
    (1) Basic employment and earnings records. From the date of last 
entry, all basic time and earning cards or sheets on which are entered 
the daily starting and stopping time of individual employees, or of 
separate work forces, or the amounts of work accomplished by individual 
employees on a daily, weekly, or pay period basis (for example, units 
produced) when those amounts determine in whole or in part the pay 
period earnings or wages of those employees.
    (2) Wage rate tables. From their last effective date, all tables or 
schedules of the employer which provide the piece rates or other rates 
used in computing straight-time earnings, wages, or salary, or overtime 
pay computation.
    (b) Order, shipping, and billing records: From the last date of 
entry, the originals or true copies of all customer orders or invoices 
received, incoming or outgoing shipping or delivery records, as well as 
all bills of lading and all billings to customers (not including 
individual sales slips, cash register tapes or the like) which the 
employer retains or makes in the usual course of business operations.
    (c) Records of additions to or deductions from wages paid:
    (1) Those records relating to individual employees referred to in 
Sec. 516.2(a)(10) and
    (2) All records used by the employer in determining the original 
cost, operating and maintenance cost, and depreciation and interest 
charges, if such costs and charges are involved in the additions to or 
deductions from wages paid.



Sec. 516.7  Place for keeping records and their availability for inspection.

    (a) Place of records. Each employer shall keep the records required 
by this part safe and accessible at the place or places of employment, 
or at one or more established central recordkeeping offices where such 
records are customarily maintained. Where the records

[[Page 105]]

are maintained at a central recordkeeping office, other than in the 
place or places of employment, such records shall be made available 
within 72 hours following notice from the Administrator or a duly 
authorized and designated representative.
    (b) Inspection of records. All records shall be available for 
inspection and transcription by the Administrator or a duly authorized 
and designated representative.



Sec. 516.8  Computations and reports.

    Each employer required to maintain records under this part shall 
make such extension, recomputation, or transcription of the records and 
shall submit to the Wage and Hour Division such reports concerning 
persons employed and the wages, hours, and other conditions and 
practices of employment set forth in the records as the Administrator or 
a duly authorized and designated representative may request in writing.



Sec. 516.9  Petitions for exceptions.

    (a) Submission of petitions for relief. Any employer or group of 
employers who, due to peculiar conditions under which they must operate, 
desire authority to maintain records in a manner other than required in 
this part, or to be relieved of preserving certain records for the 
period specified in this part, may submit a written petition to the 
Administrator requesting such authority, setting forth the reasons 
therefor.
    (b) Action on petitions. If, after review of the petition, the 
Administrator finds that the authority requested will not hinder 
enforcement of the Act, the Administrator may grant such authority 
limited by any conditions determined necessary and subject to subsequent 
revocation. Prior to revocation of such authority because of 
noncompliance with any of the prescribed conditions, the employer will 
be notified of the reasons and given an opportunity to come into 
compliance.
    (c) Compliance after submission of petitions. The submission of a 
petition or the delay of the Administrator in acting upon such petition 
will not relieve any employer or group of employers from any obligations 
to comply with all the applicable requirements of the regulations in 
this part. However, the Administrator will provide a response to all 
petitions as soon as possible.



Sec. 516.10  [Reserved]



  Subpart B--Records Pertaining to Employees Subject to Miscellaneous 
          Exemptions Under the Act; Other Special Requirements



Sec. 516.11  Employees exempt from both minimum wage and overtime pay 
requirements under section 13(a) (2), (3), (4), (5), (8), (10), (12), or 
13(d) of the Act.

    With respect to each and every employee exempt from both the minimum 
wage and overtime pay requirements of the Act pursuant to the provisions 
of section 13(a) (2), (3), (4), (5), (8), (10), (12), or 13(d) of the 
Act, employers shall maintain and preserve records containing the 
information and data required by Sec. 516.2(a) (1) through (4).



Sec. 516.12  Employees exempt from overtime pay requirements pursuant to 
section 13(b) (1), (2), (3), (5), (9), (10), (15), (16), (17), (20), (21), 
(24), (27), 
          or (28) of the Act.

    With respect to each employee exempt from the overtime pay 
requirements of the Act pursuant to the provisions of section 13(b) (1), 
(2), (3), (5), (9), (10), (15), (16), (17), (20), (21), (24), (27), or 
(28) of the Act, shall maintain and preserve payroll or other records, 
containing all the information and data required by Sec. 516.2(a) except 
paragraphs (a) (6) and (9) and, in addition, information and data 
regarding the basis on which wages are paid (such as the monetary amount 
paid, expressed as earnings per hour, per day, per week, etc.).



Sec. 516.13  Livestock auction employees exempt from overtime pay requirements 
under section 13(b)(13) of the Act.

    With respect to each employee exempt from the overtime pay 
requirements of the Act pursuant to section 13(b)(13), the employer 
shall maintain and preserve records containing the information and data 
required by Sec. 516.2(a) except paragraphs (a) (6) and (9) and, in 
addition, for each workweek

[[Page 106]]

in which the employee is employed both in agriculture and in connection 
with livestock auction operations:
    (a) The total number of hours worked by each such employee,
    (b) The total number of hours in which the employee was employed in 
agriculture and the total number of hours employed in connection with 
livestock auction operations, and
    (c) The total straight-time earnings for employment in livestock 
auction operations.



Sec. 516.14  Country elevator employees exempt from overtime pay 
requirements under section 13(b)(14) of the Act.

    (a) With respect to each employee exempt from the overtime pay 
requirements of the Act pursuant to section 13(b)(14), the employer 
shall maintain and preserve records containing the information and data 
required by Sec. 516.2(a) except paragraphs (a) (6) and (9) and, in 
addition, for each workweek, the names and occupations of all persons 
employed in the country elevator, whether or not covered by the Act, and
    (b) Information demonstrating that the ``area of production'' 
requirements of part 536 of this chapter are met.



Sec. 516.15  Local delivery employees exempt from overtime pay requirements 
pursuant to section 13(b)(11) of the Act.

    With respect to each employee exempt from the overtime pay 
requirements of the Act pursuant to section 13(b)(11), the employer 
shall maintain and preserve payroll or other records, containing all the 
information and data required by Sec. 516.2(a) except paragraphs (a) (6) 
and (9) and, in addition, information and data regarding the basis on 
which wages are paid (such as the dollar amount paid per trip; the 
dollar amount of earnings per week plus 3 percent commission on all 
cases delivered). Records shall also contain the following information:
    (a) A copy of the Administrator's finding under part 551 of this 
chapter with respect to the plan under which such employees are 
compensated;
    (b) A statement or description of any changes made in the trip rate 
or other delivery payment plan of compensation for such employees since 
its submission for such finding;
    (c) Identification of each employee employed pursuant to such plan 
and the work assignments and duties; and
    (d) A computation for each quarter-year of the average weekly hours 
of full-time employees employed under the plan during the most recent 
representative annual period as described in Sec. 551.8(g) (1) and (2) 
of this chapter.



Sec. 516.16  Commission employees of a retail or service establishment 
exempt from overtime pay requirements pursuant to section 7(i) of the Act.

    With respect to each employee of a retail or service establishment 
exempt from the overtime pay requirements of the Act pursuant to the 
provisions of section 7(i), employers shall maintain and preserve 
payroll and other records containing all the information and data 
required by Sec. 516.2(a) except paragraphs (a) (6), (8), (9), and (11), 
and in addition:
    (a) A symbol, letter or other notation placed on the payroll records 
identifying each employee who is paid pursuant to section 7(i).
    (b) A copy of the agreement or understanding under which section 
7(i) is utilized or, if such agreement or understanding is not in 
writing, a memorandum summarizing its terms including the basis of 
compensation, the applicable representative period and the date the 
agreement was entered into and how long it remains in effect. Such 
agreements or understandings, or summaries may be individually or 
collectively drawn up.
    (c) Total compensation paid to each employee each pay period 
(showing separately the amount of commissions and the amount of 
noncommission straight-time earnings).



Sec. 516.17  Seamen exempt from overtime pay requirements pursuant to 
section 13(b)(6) of the Act.

    With respect to each employee employed as a seaman and exempt from 
the overtime pay requirements of the Act pursuant to section 13(b)(6), 
the employer shall maintain and preserve payroll or other records, 
containing all the information required by Sec. 516.2(a)

[[Page 107]]

except paragraphs (a) (5) through (9) and, in addition, the following:
    (a) Basis on which wages are paid (such as the dollar amount paid 
per hour, per day, per month, etc.)
    (b) Hours worked each workday and total hours worked each pay period 
(for purposes of this section, a ``workday'' shall be any fixed period 
of 24 consecutive hours; the ``pay period'' shall be the period covered 
by the wage payment, as provided in section 6(a)(4) of the Act),
    (c) Total straight-time earnings or wages for each such pay period, 
and
    (d) The name, type, and documentation, registry number, or other 
identification of the vessel or vessels upon which employed.



Sec. 516.18  Employees employed in certain tobacco, cotton, sugar cane 
or sugar beet services, who are partially exempt from overtime pay 
requirements pursuant 
          to section 7(m), 13(h), 13(i) or 13(j) of the Act.

    With respect to each employee providing services in connection with 
certain types of green leaf or cigar leaf tobacco, cotton, cottonseed, 
cotton ginning, sugar cane, sugar processing or sugar beets who are 
partially exempt from the overtime pay requirements of the Act pursuant 
to 7(m), 13(h), 13(i) or 13(j), the employer shall, in addition to the 
records required in Sec. 516.2, maintain and preserve a record of the 
daily and weekly overtime compensation paid. Also, the employer shall 
note in the payroll records the beginning date of each workweek during 
which the establishment operates under the particular exemption.



Sec. 516.19  [Reserved]



Sec. 516.20  Employees under certain collective bargaining agreements who 
are partially exempt from overtime pay requirements as provided in section 
7(b)(1) or 
          section 7(b)(2) of the Act.

    (a) The employer shall maintain and preserve all the information and 
data required by Sec. 516.2 and shall record daily as well as weekly 
overtime compensation for each employee employed:
    (1) Pursuant to an agreement, made as a result of collective 
bargaining by representatives of employees certified as bona fide by the 
National Labor Relations Board, which provides that no employees shall 
be employed more than 1,040 hours during any period of 26 consecutive 
weeks as provided in section 7(b)(1) of the Act, or
    (2) Pursuant to an agreement, made as a result of collective 
bargaining by representatives of employees certified as bona fide by the 
National Labor Relations Board, which provides that the employee shall 
be employed not more than 2,240 hours during a specified period of 52 
consecutive weeks and shall be guranteed employment as provided in 
section 7(b)(2) of the Act.
    (b) The employer shall also keep copies of such collective 
bargaining agreement and such National Labor Relations Board 
certification as part of the records and shall keep a copy of each 
amendment or addition thereto.
    (c) The employer shall also make and preserve a record, either 
separately or as a part of the payroll:
    (1) Listing each employee employed pursuant to each such collective 
bargaining agreement and each amendment and addition thereto.
    (2) Indicating the period or periods during which the employee has 
been or is employed pursuant to an agreement under section 7(b)(1) or 
7(b)(2) of the Act, and
    (3) Showing the total hours worked during any period of 26 
consecutive weeks, if the employee is employed in accordance with 
section 7(b)(1) of the Act, or during the specified period of 52 
consecutive weeks, if employed in accordance with section 7(b)(2) of the 
Act.



Sec. 516.21  Bulk petroleum employees partially exempt from overtime pay 
requirements pursuant to section 7(b)(3) of the Act.

    With respect to each employee partially exempt from the overtime 
provisions of the Act pursuant to section 7(b)(3), the employer shall 
maintain and preserve records containing all the information and data 
required by Sec. 516.2(a), and, in addition, shall record the daily as 
well as the weekly overtime compensation paid to the employees, the rate 
per hour and the total pay for time worked between the 40th and 56th 
hour of the workweek.

[[Page 108]]



Sec. 516.22  Employees engaged in charter activities of carriers pursuant 
to section 7(n) of the Act.

    With respect to each employee employed in charter activities for a 
street, suburban or interurban electric railway or local trolley or 
motorbus carrier pursuant to section 7(n) of the Act, the employer shall 
maintain and preserve records containing all the information and data 
required by Sec. 516.2(a) and, in addition, the following:
    (a) Hours worked each workweek in charter activities; and
    (b) A copy of the employment agreement or understanding stating that 
in determining the hours of employment for overtime pay purposes, the 
hours spent by the employee in charter activities will be excluded and, 
also, the date this agreement or understanding was entered into.



Sec. 516.23  Employees of hospitals and residential care facilities 
compensated for overtime work on the basis of a 14-day work period 
pursuant to section 7(j) 
          of the Act.

    With respect to each employee of hospitals and institutions 
primarily engaged in the care of the sick, the aged, or mentally ill or 
defective who reside on the premises compensated for overtime work on 
the basis of a work period of 14 consecutive days pursuant to an 
agreement or understanding under section 7(j) of the Act, employers 
shall maintain and preserve.
    (a) The records required by Sec. 516.2 except paragraphs (a) (5) and 
(7) through (9), and in addition:
    (1) Time of day and day of week on which the employee's 14-day work 
period begins,
    (2) Hours worked each workday and total hours worked each 14-day 
work period,
    (3) Total straight-time wages paid for hours worked during the 14-
day period,
    (4) Total overtime excess compensation paid for hours worked in 
excess of 8 in a workday and 80 in the work period.
    (b) A copy of the agreement or understanding with respect to using 
the 14-day period for overtime pay computations or, if such agreement or 
understanding is not in writing, a memorandum summarizing its terms and 
showing the date it was entered into and how long it remains in effect.



Sec. 516.24  Employees employed under section 7(f) ``Belo'' contracts.

    With respect to each employee to whom both sections 6 and 7(f) of 
the Act apply, the employer shall maintain and preserve payroll or other 
records containing all the information and data required by 
Sec. 516.2(a) except paragraphs (a) (8) and (9), and, in addition, the 
following:
    (a) Total weekly guaranteed earnings,
    (b) Total weekly compensation in excess of weekly guaranty,
    (c) A copy of the bona fide individual contract or the agreement 
made as a result of collective bargaining by representatives of 
employees, or where such contract or agreement is not in writing, a 
written memorandum summarizing its terms.



Sec. 516.25  Employees paid for overtime on the basis of ``applicable'' 
rates provided in sections 7(g)(1) and 7(g)(2) of the Act.

    With respect to each employee compensated for overtime work in 
accordance with section 7(g)(1) or 7(f)(2) of the Act, employers shall 
maintain and preserve records containing all the information and data 
required by Sec. 516.2(a) except paragraphs (a) (6) and (9) and, in 
addition, the following:
    (a)(1) Each hourly or piece rate at which the employee is employed, 
(2) basis on which wages are paid, and (3) the amount and nature of each 
payment which, pursuant to section 7(e) of the Act, is excluded from the 
``regular rate,''
    (b) The number of overtime hours worked in the workweek at each 
applicable hourly rate or the number of units of work performed in the 
work-week at each applicable piece rate during the overtime hours,
    (c) Total weekly overtime compensation at each applicable rate which 
is over and above all straight-time earnings or wages earned during 
overtime worked,
    (d) The date of the agreement or understanding to use this method of 
compensation and the period covered. If the

[[Page 109]]

employee is part of a workforce or employed in or by an establishment 
all of whose workers have agreed to use this method of compensation a 
single notation of the date of the agreement or understanding and the 
period covered will suffice.



Sec. 516.26  Employees paid for overtime at premium rates computed on 
a ``basic'' rate authorized in accordance with section 7(g)(3) of the 
Act.

    With respect to each employee compensated for overtime hours at a 
``basic'' rate which is substantially equivalent to the employee's 
average hourly earnings, as authorized in accordance with section 
7(g)(3) of the Act and part 548 of this chapter, employers shall 
maintain and preserve records containing all the information and data 
required by Sec. 516.2 except paragraph (a)(6) thereof and, in addition, 
the following:
    (a)(1) The hourly rates, piece rates, or commission rates applicable 
to each type of work performed by the employee,
    (2) The computation establishing the basic rate at which the 
employee is compensated for overtime hours (if the employee is part of a 
workforce or employed in or by an establishment all of whose workers 
have agreed to accept this method of compensation, a single entry of 
this computation will suffice),
    (3) The amount and nature of each payment which, pursuant to section 
7(e) of the Act, is excluded from the ``regular rate.''
    (b)(1) Identity of representative period for computing the basic 
rate, (2) the period during which the established basic rate is to be 
used for computing overtime compensation, (3) information which 
establishes that there is no significant difference between the 
pertinent terms, conditions and circumstances of employment in the 
period selected for the computation of the basic rate and those in the 
period for which the basic rate is used for computing overtime 
compensation, which could affect the representative character of the 
period from which the basic rate is derived.
    (c) A copy of the written agreement or, if there is no such 
agreement, a memorandum summarizing the terms of and showing the date 
and period covered by the oral agreement or understanding to use this 
method of computation. If the employee is one of a group, all of whom 
have agreed to use this method of computation, a single memorandum will 
suffice.



Sec. 516.27  ``Board, lodging, or other facilities'' under section 3(m) 
of the Act.

    (a) In addition to keeping other records required by this part, an 
employer who makes deductions from the wages of employees for ``board, 
lodging, or other facilities'' (as these terms are used in sec. 3(m) of 
the Act) furnished to them by the employer or by an affiliated person, 
or who furnishes such ``board, lodging, or other facilities'' to 
employees as an addition to wages, shall maintain and preserve records 
substantiating the cost of furnishing each class of facility except as 
noted in paragraph (c) of this section. Separate records of the cost of 
each item furnished to an employee need not be kept. The requirements 
may be met by keeping combined records of the costs incurred in 
furnishing each class of facility, such as housing, fuel, or merchandise 
furnished through a company store or commissary. Thus, in the case of an 
employer who furnishes housing, separate cost records need not be kept 
for each house. The cost of maintenance, utilities, and repairs for all 
the houses may be shown together. Original cost and depreciation records 
may be kept for groups of houses acquired at the same time. Costs 
incurred in furnishing similar or closely related facilities, moreover, 
may be shown in combined records. Where cost records are kept for a 
``class'' of facility rather than for each individual article furnished 
to employees, the records must also show the gross income derived from 
each such class of facility; e.g., gross rentals in the case of houses, 
total sales through the store or commissary, total receipts from sales 
of fuel, etc.
    (1) Such records shall include itemized accounts showing the nature 
and amount of any expenditures entering into the computation of the 
reasonable cost, as defined in part 531 of this

[[Page 110]]

chapter, and shall contain the data required to compute the amount of 
the depreciated investment in any assets allocable to the furnishing of 
the facilities, including the date of acquisition or construction, the 
original cost, the rate of depreciation and the total amount of 
accumulated depreciation on such assets. If the assets include 
merchandise held for sale to employees, the records should contain data 
from which the average net investment in inventory can be determined.
    (2) No particular degree of itemization is prescribed. However, the 
amount of detail shown in these accounts should be consistent with good 
accounting practices, and should be sufficient to enable the 
Administrator or authorized representative to verify the nature of the 
expenditure and the amount by reference to the basic records which must 
be preserved pursuant to Sec. 516.6(c)(2).
    (b) If additions to or deductions from wages paid (1) so affect the 
total cash wages due in any workweek (even though the employee actually 
is paid on other than a workweek basis) as to result in the employee 
receiving less in cash than the applicable minimum hourly wage, or (2) 
if the employee works in excess of the applicable maximum hours standard 
and (i) any additions to the wages paid are a part of wages, or (ii) any 
deductions made are claimed as allowable deductions under sec. 3(m) of 
the Act, the employer shall maintain records showing on a workweek basis 
those additions to or deductions from wages. (For legal deductions not 
claimed under sec. 3(m) and which need not be maintained on a workweek 
basis, see part 531 of this chapter.)
    (c) The records specified in this section are not required with 
respect to an employee in any workweek in which the employee is not 
subject to the overtime provisions of the Act and receives not less than 
the applicable statutory minimum wage in cash for all hours worked in 
that workweek. (The application of section 3(m) of the Act in 
nonovertime weeks is discussed in part 531 of this chapter.)



Sec. 516.28  Tipped employees.

    (a) With respect to each tipped employee whose wages are determined 
pursuant to section 3(m) of the Act, the employer shall maintain and 
preserve payroll or other records containing all the information and 
data required in Sec. 516.2(a) and, in addition, the following:
    (1) A symbol, letter or other notation placed on the pay records 
identifying each employee whose wage is determined in part by tips.
    (2) Weekly or monthly amount reported by the employee, to the 
employer, of tips received (this may consist of reports made by the 
employees to the employer on IRS Form 4070).
    (3) Amount by which the wages of each tipped employee have been 
deemed to be increased by tips as determined by the employer (not in 
excess of 40 percent of the applicable statutory minimum wage). The 
amount per hour which the employer takes as a tip credit shall be 
reported to the employee in writing each time it is changed from the 
amount per hour taken in the preceding week.
    (4) Hours worked each workday in any occupation in which the 
employee does not receive tips, and total daily or weekly straight-time 
payment made by the employer for such hours.
    (5) Hours worked each workday in occupations in which the employee 
receives tips, and total daily or weekly straight-time earnings for such 
hours.
    (b) [Reserved]




Sec. 516.29  Employees employed by a private entity operating an amusement 
or recreational establishment located in a national park or national forest 
or on 
          land in the National Wildlife Refuge System who are partially 
          exempt from overtime pay requirements pursuant to section 
          13(b)(29) of the Act.

    With respect to each employee who is partially exempt from the 
overtime pay requirements of the Act pursuant to section 13(b)(29), the 
employer shall maintain and preserve the records required in Sec. 516.2, 
except that the record of the regular hourly rate of pay in 
Sec. 516.2(a)(6) shall be required only in a workweek when overtime 
compensation is due under section 13(b)(29).

[[Page 111]]



Sec. 516.30  Learners, apprentices, messengers, students, or handicapped 
workers employed under special certificates as provided in section 14 of 
the Act.

    (a) With respect to persons employed as learners, apprentices, 
messengers or full-time students employed outside of their school hours 
in any retail or service establishment in agriculture, or in 
institutions of higher education, or handicapped workers employed at 
special minimum hourly rates under Special Certificates pursuant to 
section 14 of the Act, employers shall maintain and preserve records 
containing the same information and data required with respect to other 
employees employed in the same occupations.
    (b) In addition, each employer shall segregate on the payroll or pay 
records the names and required information and data with respect to 
those learners, apprentices, messengers, handicapped workers and 
students, employed under Special Certificates. A symbol or letter may be 
placed before each such name on the payroll or pay records indicating 
that that person is a ``learner,'' ``apprentice,'' ``messenger,'' 
``student,'' or ``handicapped worker,'' employed under a Special 
Certificate.



Sec. 516.31  Industrial homeworkers.

    (a) Definitions--(1) Industrial homeworker and homeworker, as used 
in this section, mean any employee employed or suffered or permitted to 
perform industrial homework for an employer.
    (2) Industrial homework, as used in this section, means the 
production by any person in or about a home, apartment, tenement, or 
room in a residential establishment of goods for an employer who suffers 
or permits such production, regardless of the source (whether obtained 
from an employer or elsewhere) of the materials used by the homeworker 
in such production.
    (3) The meaning of the terms person, employ, employer, employee, 
goods, and production as used in this section is the same as in the Act.
    (b) Items required. In addition to all of the records required by 
Sec. 516.2, every employer of homeworkers shall maintain and preserve 
payroll or other records containing the following information and data 
with respect to each and every industrial homeworker employed (excepting 
those homeworkers to whom section 13(d) of the Act applies and those 
homeworkers in Puerto Rico to whom part 545 of this chapter applies, or 
in the Virgin Islands to whom part 695 of this chapter applies):
    (1) With respect to each lot of work:
    (i) Date on which work is given out to worker, or begun by worker, 
and amount of such work given out or begun;
    (ii) Date on which work is turned in by worker, and amount of such 
work;
    (iii) Kind of articles worked on and operations performed;
    (iv) Piece rates paid;
    (v) Hours worked on each lot of work turned in;
    (vi) Wages paid for each lot of work turned in.
    (2) With respect to any agent, distributor, or contractor: The name 
and address of each such agent, distributor, or contractor through whom 
homework is distributed or collected and the name and address of each 
homeworker to whom homework is distributed or from whom it is collected 
by each such agent, distributor, or contractor.
    (c) Homeworker handbook. In addition to the information and data 
required in paragraph (b) of this section, a separate handbook (to be 
obtained by the employer from the Wage and Hour Division and supplied by 
such employer to each worker) shall be kept for each homeworker. The 
employer is required to insure that the hours worked and other 
information required therein is entered by the homeworker when work is 
performed and/or business-related expenses are incurred. This handbook 
must remain in the possession of the homeworker except at the end of 
each pay period when it is to be submitted to the employer for 
transcription of the hours worked and other required information and for 
computation of wages to be paid. The handbooks shall include a provision 
for written verification by the employer attesting that the homeworker 
was instructed to accurately record all of the required information 
regarding such homeworker's employment, and that, to the best of his or 
her knowledge and belief, the information was recorded

[[Page 112]]

accurately. Once no space remains in the handbook for additional 
entries, or upon termination of the homeworker's employment, the 
handbook shall be returned to the employer. The employer shall then 
preserve this handbook for at least two years and make it available for 
inspection by the Wage and Hour Division on request.

[52 FR 24896, July 1, 1987, as amended at 53 FR 45726, Nov. 10, 1988]



Sec. 516.32  [Reserved]



Sec. 516.33  Employees employed in agriculture pursuant to section 13(a)(6)
or 13(b)(12) of the Act.

    (a) No records, except as required under paragraph (f) of this 
section, need be maintained by an employer who did not use more than 500 
man-days \1\ of agricultural labor in any quarter of the preceding 
calendar year, unless it can reasonably be anticipated that more than 
500 man-days of agricultural labor will be used in at least one calendar 
quarter of the current calendar year. The 500 man-day test includes the 
work of agricultural workers supplied by crew leaders, or farm labor 
contractors, if the farmer is an employer of such workers, or a joint 
employer of such workers with the crew leader or farm labor contractor. 
However, members of the employer's immediate family are not included. (A 
``man-day'' is any day during which an employee does agricultural work 
for 1 hour or more.)
---------------------------------------------------------------------------

    \1\ Sections 3(u) and 13(a)(6) of the Fair Labor Standards Act (29 
U.S.C. 201 et seq.) set forth and define the term ``man-day.''
---------------------------------------------------------------------------

    (b) If it can reasonably be anticipated that the employer will use 
more than 500 man-days of agricultural labor in at least one calendar 
quarter of the current calendar year, the employer shall maintain and 
preserve for each employee records containing all the information and 
data required by Sec. 516.2(a) (1), (2) and (4) and, in addition, the 
following:
    (1) Symbols or other identifications separately designating those 
employees who are
    (i) Members of the employer's immediate family as defined in section 
13(a)(6)(B) of the Act,
    (ii) Hand harvest laborers as defined in section 13(a)(6) (C) or 
(D), and
    (iii) Employees principally engaged in the range production of 
livestock as defined in section 13(a)(6)(E).
    (2) For each employee, other than members of the employer's 
immediate family, the number of man-days worked each week or each month.
    (c) For the entire year following a year in which the employer used 
more than 500 man-days of agricultural labor in any calendar quarter, 
the employer shall maintain, and preserve in accordance with Secs. 516.5 
and 516.6, for each covered employee (other than members of the 
employer's immediate family, hand harvest laborers and livestock range 
employees as defined in sections 13(a)(6) (B), (C), (D), and (E) of the 
Act) records containing all the information and data required by 
Sec. 516.2(a) except paragraphs (a) (3) and (8).
    (d) In addition to other required items, the employer shall keep on 
file with respect to each hand harvest laborer as defined in section 
13(a)(6)(C) of the Act for whom exemption is taken, a statement from 
each such employee showing the number of weeks employed in agriculture 
during the preceding calendar year.
    (e) With respect to hand harvest laborers as defined in section 
13(a)(6)(D), for whom exemption is taken, the employer shall maintain in 
addition to paragraph (b) of this section, the minor's date of birth and 
name of the minor's parent or person standing in place of the parent.
    (f) Every employer (other than parents or guardians standing in the 
place of parents employing their own child or a child in their custody) 
who employs in agriculture any minor under 18 years of age on days when 
school is in session or on any day if the minor is employed in an 
occupation found to be hazardous by the Secretary shall maintain and 
preserve records containing the following data with respect to each and 
every such minor so employed:
    (1) Name in full,
    (2) Place where minor lives while employed. If the minor's permanent 
address is elsewhere, give both addresses,
    (3) Date of birth.
    (g) Where a farmer and a bona fide independent contractor or crew 
leader

[[Page 113]]

are joint employers of agricultural laborers, each employer is 
responsible for maintaining and preserving the records required by this 
section. Duplicate records of hours and earnings are not required. The 
requirements will be considered met if the employer who actually pays 
the employees maintains and preserves the records specified in 
paragraphs (c) and (f) of this section.



Sec. 516.34  Exemption from overtime pay for time spent by certain employees 
receiving remedial education pursuant to section 7(q) of the Act.

    With respect to each employee exempt from the overtime pay 
requirements of the Act for time spent receiving remedial education 
pursuant to section 7(q) of the Act and Sec. 778.603 of this title, the 
employer shall maintain and preserve records containing all the 
information and data required by Sec. 516.2 and, in addition, shall also 
make and preserve a record, either separately or as a notation on the 
payroll, showing the hours spent each workday and total hours each 
workweek that the employee is engaged in receiving such remedial 
education that does not include any job-specific training but that is 
designed to provide reading and other basic skills at or below the 
eighth-grade level or to fulfill the requirements for a high school 
diploma (or General Educational Development certificate), and the 
compensation (at not less than the employee's regular rate of pay) paid 
each pay period for the time so engaged.

[56 FR 61101, Nov. 29, 1991]



PART 519--EMPLOYMENT OF FULL-TIME STUDENTS AT SUBMINIMUM WAGES--Table of 
Contents




      Subpart A--Retail or Service Establishments, and Agriculture

Sec.
519.1  Applicability of the regulations in this subpart.
519.2  Definitions.
519.3  Application for a full-time student certificate.
519.4  Procedure for action upon an application.
519.5  Conditions governing issuance of full-time student certificates.
519.6  Terms and conditions of employment under full-time student 
          certificates and under temporary authorization.
519.7  Records to be kept.
519.8  Amendment or replacement of a full-time student certificate.
519.9  Reconsideration and review.
519.10  Amendment or revocation of the regulations in this subpart.

               Subpart B--Institutions of Higher Education

519.11  Applicability of the regulations in this subpart.
519.12  Definitions.
519.13  Application for a full-time student certificate.
519.14  Procedure for action upon an application.
519.15  Conditions governing issuance of full-time student certificates.
519.16  Terms and conditions of employment under full-time student 
          certificates and under temporary authorization.
519.17  Records to be kept.
519.18  Amendment or replacement of a full-time student certificate.
519.19  Reconsideration and review.
519.20  Amendment or revocation of the regulations in this subpart.

    Authority: Secs. 11 and 14, 52 Stat. 1068; sec. 11, 75 Stat. 74; 
secs. 501 and 602, 80 Stat. 843, 844 (29 U.S.C. 211, 214).

    Source: 40 FR 6329, Feb. 11, 1975, unless otherwise noted.



      Subpart A--Retail or Service Establishments, and Agriculture



Sec. 519.1  Applicability of the regulations in this subpart.

    (a) Statutory provisions. Under section 14 of the Fair Labor 
Standards Act of 1938, as amended, and the authority and responsibility 
delegated to him/her by the Secretary of Labor (36 FR 8755) and by the 
Assistant Secretary for Employment Standards (39 FR 33841) the 
Administrator of the Wage and Hour Division is authorized and directed, 
to the extent necessary in order to prevent curtailment of opportunities 
for employment, to provide by regulation or order for the employment, 
under certificates, of full-time students in retail or service 
establishments, or in agriculture. That section contains provisions 
requiring a wage rate in such certificates of not less than 85 percent 
of the minimum wage applicable under section 6 of the Act, limiting 
weekly

[[Page 114]]

hours of employment, stipulating compliance with the applicable child-
labor standards, and safeguarding against the reduction of the full-time 
employment opportunities of employees other than full-time students 
employed under certificates.
    (b) Source of limitations. Some of the limitations in this subpart 
are specifically required in section 14(b) of the Act. The other 
limitations implement the provisions in that section relating to 
employment opportunities, i.e., the ``extent necessary to prevent 
curtailment of opportunities for employment'' and the avoidance of a 
``substantial probability of reducing the full-time employment 
opportunities of persons other than those to whom the minimum wage rate 
authorized'' under section 14(b) is applicable.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975]



Sec. 519.2  Definitions.

    (a) Full-time students. A full-time student for the purpose of this 
subpart is defined as a student who receives primarily daytime 
instruction at the physical location of a bona fide educational 
institution, in accordance with the institution's accepted definition of 
a full-time student. A full-time student retains that status during the 
student's Christmas, summer and other vacations. An individual who was 
such a student immediately prior to vacation will be presumed not to 
have discontinued such status during vacation if local law requires his/
her attendance at the end of the vacation. In the absence of such 
requirement his/her status during vacation will be governed by his/her 
intention as last communicated to his/her employer. The phrase in 
section 14(b) of the statute ``regardless of age but in compliance with 
applicable child-labor laws,'' among other things, restricts the 
employment in a retail or service establishment to full-time students 
who are at least 14 years of age because of the application of section 
3(1) of the Act. There is a minimum age requirement of 16 years in 
agriculture for employment during school hours and in any occupation 
declared hazardous by the Secretary of Labor (subpart E-1 of part 570 of 
this title.) In addition, there is a minimum age restriction of 14 years 
generally for employment in agriculture of a full-time student outside 
school hours for the school district where such employee is living while 
so employed, except (1) Minors 12 or 13 years of age may be employed 
with written parental or guardian consent or they may work on farms 
where their parents or guardians are employed, and (2) minors under 12 
may work on farms owned or operated by their parents or with parental or 
guardian consent on farms whose employees are exempt from section 6 by 
section 13 (a)(6)(A) of the Act.
    (b) Bona fide educational institution. A bona fide educational 
institution is ordinarily an accredited institution. However, a school 
which is not accredited may be considered a bona fide educational 
institution in exceptional circumstances, such as when the school is too 
recently established to have received accreditation.
    (c) Retail or service establishment. Retail or service establishment 
means a retail or service establishment as defined in section 13(a)(2) 
of the Fair Labor Standards Act. The statutory definition is interpreted 
in part 779 of this chapter.
    (d) Agriculture. Agriculture means agriculture as defined in section 
3(f) of the Fair Labor Standards Act. The statutory definition is 
interpreted in part 780 of this chapter.
    (e) Student hours of employment. Student hours of employment means 
hours during which students are employed under full-time student 
certificates issued under this part and is distinguished from hours of 
employment of students.
    (f) Employer. Section 519.4 permits an agricultural or retail or 
service establishment employer to employ not more than six full-time 
students at subminimum wages on forwarding an application but before 
certification. For this purpose, the term employer looks to the highest 
structure of ownership or control, and hence may be more than a single 
retail or service establishment or farm, e.g., the controlling 
conglomerate or enterprise would be the employer. With respect to public 
employers who operate retail or service establishments (see 29 CFR part 
779), the employer means the highest structure of

[[Page 115]]

control such as the State, municipality, county or other political 
subdivision.

[40 FR 6329, Feb. 11, 1975, as amended at 42 FR 58745, Nov. 11, 1977; 43 
FR 29000, July 5, 1978]



Sec. 519.3  Application for a full-time student certificate.

    (a) Whenever the employment of full-time students working outside of 
school hours in agriculture or in a retail or service establishment at 
wages lower than the minimum applicable under section 6 of the Fair 
Labor Standards Act is believed to be necessary to prevent curtailment 
of opportunities for employment and employment of them will not create a 
substantial probability of reducing the full-time employment 
opportunities of the other workers, an application for a certificate may 
be filed by their employer with the appropriate Regional Office of the 
Wage and Hour Division (or the Denver, Colorado Area Office for 
Colorado, North Dakota, and South Dakota; the Salt Lake City, Utah area 
Office for Montana, Utah, and Wyoming; and the Caribbean Office for the 
area it covers). Such application shall be signed by an authorized 
representative of the employer.
    (b) The application must be filed in duplicate on official forms or 
exact copies thereof. The forms are available at the offices mentioned 
in paragraph (a) of this section. The application must contain the 
information as to the type of products sold or services rendered by the 
establishment, hours of employment during the preceding twelve-month 
period or data from previous certificates (or applications) as pertinent 
to the application, and other information for which request is made on 
the form.
    (c) Separate application must be made for each farm or establishment 
in which authority to employ full-time students at subminimum wage rates 
is sought.
    (d) Application for renewal of a certificate shall be made either on 
the same type of form as is used for a new application or on an 
alternate official form. No certificate in effect shall expire until 
action on such an application shall have been finally determined, 
provided that such application has been properly executed, and is 
received by the office specified in paragraph (a) of this section not 
less than 15 nor more than 30 days prior to the expiration date. A 
properly executed application is one which fully and accurately contains 
the information required on the form, and the required certification by 
an authorized representative of the employer.



Sec. 519.4  Procedure for action upon an application.

    (a) Under certain conditions, an agricultural or retail or service 
establishment employer may obtain temporary authorization to employ 
full-time students at subminimum wages. These conditions are: (1) 
Attestation by the employer that he/she will employ no more than six 
full-time students at subminimum wages on any workday and that the 
employment of such students will not reduce the full-time employment 
opportunities of other persons, and (2) forwarding a properly completed 
application to the Wage and Hour Division not later than the start of 
such employment, and (3) posting a notice of such filing at the place(s) 
specified in paragraph (a) of Sec. 519.6 of this subpart, and (4) 
compliance during the temporary authorization period with the 
requirements set forth in paragraphs (b) and (j) through (o) of 
Sec. 519.6 of this subpart.
    (b) Temporary authorization under the conditions set forth in 
paragraph (a) of this section is effective from the date the application 
is forwarded to the Wage and Hour Division in conformance with 
Sec. 519.3 of this subpart. This authorization shall continue in effect 
for one year from the date of forwarding of the application unless, 
within 30 days the Administrator or his/her authorized representative 
denies the application, issues a certificate with modified terms and 
conditions, or expressly extends the 30-day period of review.
    (c) Upon receipt of an application for a certificate, the officer 
authorized to act upon such application shall issue a certificate if the 
terms and conditions specified in this subpart are satisfied.

[[Page 116]]

To the extent he/she deems appropriate, the authorized officer may 
provide an opportunity to other interested persons to present data, 
views, or argument on the application prior to granting or denying a 
certificate.
    (d) Until April 30, 1976, if a certificate is issued, there shall be 
published in the Federal Register a general statement of the terms of 
such certificate together with a notice that, pursuant to Sec. 519.9, 
for 45 days following such publication any interested person may file a 
written request for reconsideration or review. Thereafter, applications 
and certificates will be available for examination in accordance with 
applicable regulations in Washington, DC, and in the appropriate 
Regional Office of the Wage and Hour Division (or the Denver, Colorado 
Area Office for Colorado, North Dakota, and South Dakota; the Salt Lake 
City, Utah Area Office for Montana, Utah, and Wyoming; and the Caribbean 
Office for the area it covers) for establishments in its area. A period 
of 60 days will be provided after certificate issuance during which any 
interested person may file a written request for reconsideration or 
review.
    (e) If a certificate is denied, notice of such denial shall be sent 
to the employer, stating the reason or reasons for the denial. Such 
denial shall be without prejudice to the filing of any subsequent 
application.

[40 FR 6329, Feb. 11, 1975, as amended at 42 FR 58745, Nov. 11, 1977]



Sec. 519.5  Conditions governing issuance of full-time student certificates.

    Certificates authorizing the employment of full-time students at 
subminimum wage rates shall not be issued unless the following 
conditions are met:
    (a) Full-time students are available for employment at subminimum 
rates; the granting of a certificate is necessary in order to prevent 
curtailment of opportunities for employment.
    (b) The employment of more than six full-time students by an 
employer will not create a substantial probability of reducing the full-
time employment opportunities for persons other than those employed 
under such certificates.
    (c) Abnormal labor conditions such as a strike or lockout do not 
exist at the farm or establishment for which a full-time student 
certificate is requested.
    (d) The data given on the application are accurate and based on 
available records.
    (e) The farms or establishments on whose experience the applicant 
relies meet the requirements of paragraph (h) of Sec. 519.6.
    (f) There are no serious outstanding violations of the provisions of 
a full-time student certificate previously issued to the employer, nor 
have there been any serious violations of the Fair Labor Standards Act 
(including Child-Labor Regulation No. 3 and the Hazardous Occupations 
Orders published in part 570 of this chapter) which provide reasonable 
grounds to conclude that the terms of a certificate may not be compiled 
with, if issued.
    (g) The subminimum wage rate(s) proposed to be paid full-time 
students under temporary authorization or under certificate is not less 
than 85 percent of the minimum wage applicable under section 6 of the 
Act.
    (h) Certificates will not be issued where such issuance will result 
in a reduction of the wage rate paid to a current employee, including 
current student employees.

[40 FR 6329, Feb. 11, 1975, as amended at 42 FR 58745, Nov. 11, 1977]



Sec. 519.6  Terms and conditions of employment under full-time student 
certificates and under temporary authorization.

    (a) A full-time student certificate will not be issued for a period 
longer than 1 year, nor will it be issued retroactively. It shall 
specify its effective and expiration dates. A copy of the certificate 
shall be posted during its effective period in a conspicuous place or 
places in the establishment or at the farm readily visable to all 
employees, for example, adjacent to the time clock or on the bulletin 
board used for notices to the employees. If temporary authorization is 
in effect under paragraph (a) of Sec. 519.4 of this subpart, a notice 
thereof shall be similarly posted during the effective period of such 
authorization.

[[Page 117]]

    (b) Full-time students may not be employed under a certificate at 
less than 85 percent of the minimum wage applicable under section 6 of 
the Act.
    (c) For retail or service establishment employers or agricultural 
employers, the allowable extent of full-time student employment under 
certificates varies depending on whether: (1) The employer proposes to 
employ no more than six full-time students at subminimum wages on any 
workday, (2) the applicant requests authority for not more than 10 
percent of the total hours of all employees during any month, or (3) the 
applicant requests authority for more than 10 percent of the total hours 
during any month. (For agricultural employers, the month of full-time 
student certificated employment may vary somewhat from the month in a 
previous year on which the certificate is based, depending on seasonal 
factors.)
    (d) Retail or service establishment employers or agricultural 
employers requesting authorization to employ not more than six full-time 
students at subminimum wages on any workday. An application from such an 
applicant provides temporary authorization for the employment of full-
time students at subminimum wages: Provided, The conditions set forth in 
paragraph (a) of Sec. 519.4 of this subpart are met. Upon review of the 
application by the Administration or his/her authorized representative, 
the extent of the temporary authority may be modified.
    (e) Applicants requesting authorization for not more than 10 percent 
of the total hours of all employees during any month. For such an 
applicant, certificates may authorize the employment of full-time 
student at subminimum wages for up to 10 percent of the total hours of 
all employees during any month, regardless of past practice of employing 
students. (Note: An establishment which has not previously held a 
certificate may be authorized 10 percent of the total hours of all 
employees during any month. Applicants requesting authority under this 
paragraph need not refer to paragraphs (f), (g), or (h) of this 
section.)
    (f) Applicants reguesting authorization for more than 10 percent of 
the total monthly hours of all employees during any month with records 
of hours of employment of students and coverage by the Act prior to May 
1974. For such an applicant, certificates may not authorize full-time 
student employment at subminimum wages in excess of the highest ratio 
under any of these three formulas: (1) The proportion of student hours 
of employment (i.e., of full-time students under certificates) to total 
hours of all employees for the corresponding month of the preceding 
twelve-month period; (2) the maximum proportion of student hours of 
employment to total hours of all employees (in any corresponding month), 
applicable to the issuance of full-time student certificates before May 
1974; or (3) 10 percent of the total hours of all employees, during any 
month. (Note: An establishment which is entitled to monthly allowances 
ranging from 5 to 20 percent may be authorized 10 percent for those 
months which were less than 10 percent and retain the higher allowances 
for those months above 10 percent.)
    (g) Applicants requesting authorization for more than 10 percent of 
the total hours of all employees during any month with records of hours 
of employment of students and new coverage under the 1974 Amendments. 
For such an applicant, the highest permissible allowance under a 
certificate during any month is the highest ratio under any of these 
three formulas: (1) The proportion of hours of employment of full-time 
students to total hours of all employees during the corresponding month 
from May 1973 through April 1974; (2) the proportion of student hours of 
employment (i.e., of hours of full-time students under certificates) to 
total hours of all employees during the corresponding month of the 
preceding twelve-month period (an alternative which is not applicable to 
all months of the year until 12 months after May 1, 1974); or (3) 10 
percent of the total hours of all employees, during any month. (See 
notes under paragraphs (e) and (f) of this section.)
    (h) Applicants requesting authorization for more than 10 percent of 
the total hours of all employees during any month without records of 
student hours worked. For such an applicant, the permissible proportion 
under certificate of full-time student hours at subminimum wages to

[[Page 118]]

total hours of all employees is based on the ``practice'' during the 
preceding twelve-month period of: (1) Similar establishments of the same 
employer in the same general metropolitan areas in which such 
establishment is located: (2) similar establishments in the same or 
nearby communities if such establishment is not in a metropolitan area; 
or (3) other establishments of the same general character operating in 
the community or the nearest comparable community. (``Practice'' means 
either the certificate allowances or the proportion between the actual 
student hours of employment to the total hours of all employees.)
    (i) An overestimate of total hours of employment of all employees 
for a current month resulting in the employment of the full-time 
students in excess of the hours authorized in paragraph (e), (f), (g), 
or (h) of this section may be corrected by compensating them for the 
difference between the subminimum wages actually paid and the applicable 
minimum under section 6 of the Act for the excess hours. Similarly, if 
an agricultural employer or a retail or service establishment employer 
has authorization to employ no more than six full-time students at 
subminimum wages on any workday but exceeds that number, the excess may 
be corrected by compensating the additional full-time students for the 
difference between the subminimum wages actually paid and the applicable 
minimum under section 6 of the Act. This additional compensation shall 
be paid on the regular payday next after the end of the period.
    (j) Full-time students shall not be permitted to work at subminimum 
wages for more than 8 hours a day, nor for more than 40 hours a week 
when school is not in session, nor more than 20 hours a week when school 
is in session (apart from a full-time student's summer vacation), except 
that when a full-day school holiday occurs on a day when the 
establishment is open for business, the weekly limitation on the maximum 
number of hours which may be worked shall be increased by 8 hours for 
each such holiday but in no event shall the 40-hour limitation be 
exceeded. (Note: School is considered to be in session for a student 
attending summer school.) Whenever a full-time student is employed for 
more than 20 hours in any workweek in conformance with this paragraph, 
the employer shall note in his/her payroll records that school was not 
in session during all or part of that workweek or the student was in 
his/her summer vacation.
    (k) Neither oppressive child labor as defined in section 3(1) of the 
Act and regulations issued under the Act nor any other employment in 
violation of a Federal, State or local child labor law or ordinance 
shall come within the terms of any certificate issued under this 
subpart.
    (l) Full-time students shall be employed at subminimum wages under 
this subpart only outside of their school hours, i.e., only outside of 
the scheduled hours of instruction of the individual student, or, in the 
case of agriculture, only outside of school hours for the school 
district where the employee is living while so employed, if the employee 
is under 16 years of age.
    (m) No full-time student shall be hired under a full-time student 
certificate while abnormal labor conditions, such as a strike or 
lockout, exist at the establishment or farm.
    (n) No provision of any full-time student certificate shall excuse 
noncompliance with higher standards applicable to full-time students 
which may be established under the Walsh-Healey Public Contracts Act or 
any other Federal law, State law, local ordinance, or union or other 
agreement. Thus, certificates issued under this law have no application 
to employment under the Service Contract Act.
    (o) No full-time student certificate shall apply to any employee to 
whom a certificate issued under section 14 (a) or (c) of the Act has 
application.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975, as amended at 42 
FR 58745, Nov. 11, 1977]



Sec. 519.7  Records to be kept.

    (a) The employer shall designate each worker employed as a full-time 
student under a full-time student certificate at subminimum wages, as 
provided under part 516 of this chapter.
    (b)(1) In addition to the records required under part 516 of this 
chapter and this subpart, the employer shall

[[Page 119]]

keep the records specified in paragraph (b) (2) and (3) of this section 
specifically relating to full-time students employed at subminimum 
wages.
    (2) The employer shall obtain at the time of hiring and keep in his 
records information from the school attended that the employee receives 
primarily daytime instruction at the physical location of the school in 
accordance with the school's accepted definition of a full-time student. 
During a period between attendance at different schools not longer than 
the usual summer vacation, a certificate from the school next to be 
attended that the student has been accepted as a full-time student will 
satisfy the requirements of this paragraph (b)(2).
    (3) The employer operating any farm or retail or service 
establishment shall maintain records of the monthly hours of employment 
of full-time students at subminimum wages and of the total hours of 
employment during the month of all employees in the establishment except 
for those employed in agriculture who come within one of the other 
exemptions from the minimum wage provisions of the Act.
    (c) The records required in this section, including a copy of any 
full-time student certificate issued, shall be kept for a period of 3 
years at the place and made available for inspection, both as provided 
in part 516 of this chapter.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975]



Sec. 519.8  Amendment or replacement of a full-time student certificate.

    In the absence of an objection by the employer (which may be 
resolved in the manner provided in part 528 of this chapter), the 
authorized officer upon his/her own motion may amend the provisions of a 
certificate when it is necessary by reason of the amendment of these 
regulations, or may withdraw a certificate and issue a replacement 
certificate when necessary to correct omissions or apparent defects in 
the original certificate.



Sec. 519.9  Reconsideration and review.

    (a) Within 15 days after being informed of a denial of an 
application for a full-time student certificate or within 45 days after 
Federal Register publication of a statement of the terms of the 
certificate granted (subsequent to April 30, 1976, within 60 days after 
a certificate is granted), any person aggrieved by the action of an 
authorized officer in denying or granting a certificate may: (1) File a 
written request for reconsideration thereof by the authorized officer 
who made the decision in the first instance, or (2) file with the 
Administrator a written request for review.
    (b) A request for reconsideration shall be accompanied by a 
statement of the additional evidence which the applicant believes may 
materially affect the decision and a showing that there were reasonable 
grounds for failure to present such evidence in the original 
proceedings.
    (c) Any person aggrieved by the reconsideration determination of an 
authorized officer may, within 15 days after such determination, file 
with the Administrator a written request for review.
    (d) A request for review shall be granted where reasonable grounds 
for the review are set forth in the request.
    (e) If a request for reconsideration or review is granted, the 
authorized officer or the Administrator may, to the extent he/she deems 
it appropriate, afford other interested persons an opportunity to 
present data, views, or argument.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975]



Sec. 519.10  Amendment or revocation of the regulations in this subpart.

    The Administrator may at any time upon his/her motion or upon 
written request of any interested person or persons setting forth 
reasonable grounds therefor, and after opportunity has been given to 
interested persons to present data, views, or argument, amend or revoke 
any of the regulations of this subpart.



               Subpart B--Institutions of Higher Education



Sec. 519.11  Applicability of the regulations in this subpart.

    (a) Statutory provisions. Under section 14 of the Fair Labor 
Standards Act of 1938, as amended, and the authority

[[Page 120]]

and responsibility delegated to him/her by the Secetary of Labor (36 FR 
8755) and by the Assistant Secretary for Employment Standards (39 FR 
3384l), the Administrator of the Wage and Hour Division is authorized 
and directed, to the extent necessary in order to prevent curtailment of 
opportunities for employment, to provide by regulation or order for the 
employment, under certificates, of full-time students in institutions of 
higher education. That section contains provisions requiring a wage rate 
in such certificates of not less than 85 percent of the minimum wage 
applicable under section 6 of the Act, limiting weekly hours of 
employment, stipulating compliance with the applicable child-labor 
standards, and safeguarding against the reduction of the full-time 
employment opportunities of employees other than full-time students 
employed under certificates.
    (b) Source of limitations. Some of the limitations expressed in this 
subpart are specifically required in section 14(b) of the Act. The other 
limitations implement the provisions relating to employment 
opportunities, i.e., the ``extent necessary in order to prevent 
curtailment of opportunities for employment'' and the requirement that 
the regulations shall ``prescribe standards and requirements to insure 
that this paragraph will not create a substantial probability of 
reducing the full-time employment opportunities of persons other than 
those to whom the minimum wage rate authorized by'' section 14(b) of the 
Act is applicable.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975]



Sec. 519.12  Definitions.

    (a) Full-time students. A full-time student for the purpose of this 
subpart is defined as one who meets the accepted definition of a full-
time student of the institution of higher education which employs him/
her. A full-time student retains that status during the student's 
Christmas, summer and other vacations, even when a student is taking one 
or more courses during his/her summer or other vacation. The phrase in 
section 14(b) of the statute ``regardless of age but in compliance with 
applicable child labor laws'', among other things restricts the 
employment in an institution of higher education to full-time students 
who are at least 14 years of age because of the application of section 
3(1) of the Act.
    (b) Institution of higher education. An institution of higher 
education is an institution above the secondary level, such as a college 
or university, a junior college, or a professional school of 
engineering, law, library science, social work, etc. It is one that is 
recognized by a national accrediting agency or association as determined 
by the U.S. Commissioner of Education. Generally, an institution of 
higher education: (1) Admits as regular students only individuals having 
a certificate of graduation from a high school or the recognized 
equivalent of such a certificate; and (2) is legally authorized within a 
State to provide a program of education beyond high school; and (3) 
provides an educational program for which it normally awards a 
bachelor's degree, or provides not less than a two-year program which is 
acceptable for full credit toward such a degree or offers a two-year 
program in engineering, mathematics, or the physical or biological 
sciences which is designed to prepare the student to work as a 
technician and at a semi-professional level in engineering, scientific, 
or other technological fields which require the understanding and 
application of basic engineering, scientific, or mathematical principles 
of knowledge.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975]



Sec. 519.13  Application for a full-time student certificate.

    (a) Whenever the employment of its full-time students working in an 
institution at wages lower than the minimum wage applicable under 
section 6 of the Fair Labor Standards Act is believed to be necessary to 
prevent curtailment of opportunities for employment and employment of 
them will not create a substantial probability of reducing the full-time 
employment opportunities of other workers, an application for a 
certificate may be filed by their employer with the appropriate Regional 
Office of the Wage and Hour Division (or the Denver, Colorado Area 
Office for Colorado, North Dakota and South Dakota; the Salt Lake City,

[[Page 121]]

Utah Area Office for Montana, Utah and Wyoming; and the Caribbean Office 
for the area it covers). Such an application shall be signed by an 
authorized representative of the employer.
    (b) The application provided for under Sec. 519.14 must be filed in 
duplicate on official forms or exact copies thereof. The forms are 
available at the offices mentioned in paragraph (a) of this section. The 
application must contain the information on numbers of full-time 
students and full-time employees (other than full-time students), 
minimum full-time student wages, and other information for which request 
is made on the form.
    (c) Separate application must be made for each campus of an 
institution of higher education for which authority to employ full-time 
students at subminimum wage rates is sought.
    (d) Application for renewal of a certificate shall be made on the 
same type of form as is used for a new application. No certificate in 
effect shall expire until action on such an application shall have been 
finally determined, provided that such application has been properly 
executed, and is received by the office specified in paragraph (a) of 
this section not less than 15 nor more than 30 days prior to the 
expiration date. A properly executed application is one which fully and 
accurately contains the information required on the form, and the 
required certification by an authorized representative of the employer.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975]



Sec. 519.14  Procedure for action upon an application.

    (a) Under certain conditions, an institution of higher education has 
temporary authorization to employ full-time students at subminimum 
wages. These conditions are:
    (1) Absence of an effective finding by the Secretary that the 
institution has been employing full-time students under certificates in 
violation of the requirements of section 14(b)(3) of the Act or of these 
regulations; and
    (2) Forwarding of a properly completed application to the Wage and 
Hour Division not later than the start of employment of full-time 
students at subminimum wages; and
    (3) Posting a notice of such filing at the place(s) specified in 
paragraph (a) of Sec. 519.16 of this subpart; and
    (4) Compliance during the temporary authorization period with the 
requirements set forth in paragraphs (b) and (e) through (j) of 
Sec. 519.16 of this subpart.
    (b) Temporary authorization under the conditions set forth in 
paragraph (a) of this section is effective from the date the application 
is forwarded to the Wage and Hour Division in conformance with 
Sec. 519.13 of this subpart. This authorization shall continue in effect 
for one year from the date of forwarding of the application unless, 
within 30 days, the Administrator or his/her authorized representative 
denies the application, issues a certificate with modified terms and 
conditions, or expressly extends the 30-day period of review.
    (c) Upon receipt of an application for a certificate, the officer 
authorized to act upon such application shall issue a certificate if the 
terms and conditions specified in this subpart are satisfied. To the 
extent he/she deems appropriate, the authorized officer may provide an 
opportunity to other interested persons to present data, views, or 
argument on the application prior to granting or denying a certificate.
    (d) Until April 30, 1976, if a certificate is issued there shall be 
published in the Federal Register a general statement of the terms of 
such certificate together with a notice that, pursuant to Sec. 519.19, 
for 45 days following such publication any interested person may file a 
written request for reconsideration or review. Thereafter, applications 
and certificates will be available for examination in accordance with 
applicable regulations in Washington, DC, and in the appropriate 
Regional Office of the Wage and Hour Division (or the Denver, Colorado 
Area Office for Colorado, North Dakota, and South Dakota; the Salt Lake 
City, Utah Area Office for Montana, Utah, and Wyoming; and the Caribbean 
Office for the area it covers) for institutions of higher education in 
its area. A period of 60 days will be provided after certificate 
issuance during which any interested person may file a

[[Page 122]]

written request for reconsideration or review.
    (e) If a certificate is denied, notice of such denial shall be sent 
to the employer, stating the reason or reasons for the denial. Such 
denial shall be without prejudice to the filing of any subsequent 
application.



Sec. 519.15  Conditions governing issuance of full-time student certificates.

    Certificates authorizing the employment of full-time students at 
subminimum wage rates shall not be issued unless the following 
conditions are met:
    (a) Full-time students are available for employment at subminimum 
rates; the granting of a certificate is necessary in order to prevent 
curtailment of opportunities for employment.
    (b) The employment of full-time students will not create a 
substantial probability of reducing the full-time employment 
opportunities for persons other than those employed under such 
certificates.
    (c) Abnormal labor conditions such as a strike or lockout do not 
exist in the units of the campus for which a full-time student 
certificate is requested.
    (d) The data given on the application are accurate and based on 
available records.
    (e) There are no serious outstanding violations of the provisions of 
a full-time student certificate previously issued to the employer, nor 
have there been any serious violations of the Fair Labor Standards Act 
(including Child-Labor Regulation No. 3 and the Hazardous Occupations 
Orders published in part 570 of this chapter) which provide reasonable 
grounds to conclude that the terms of a certificate may not be complied 
with, if issued.
    (f) The subminimum wage rate(s) proposed to be paid full-time 
students under temporary authorization or under certificate is not less 
than 85 percent of the minimum wage applicable under section 6 of the 
Act.
    (g) Full-time students are not to be employed by an institution of 
higher education at subminimum wages under this subpart in unrelated 
trades or businesses as defined and applied under sections 511 through 
515 of the Internal Revenue Code, such as apartment houses, stores, or 
other businesses not primarily catering to the students of the 
institution.
    (h) Certificates will not be issued where such issuance will result 
in a reduction of the wage rate paid to a current employee, including 
current student employees.



Sec. 519.16  Terms and conditions of employment under full-time student 
certificates and under temporary authorization.

    (a) A full-time student certificate will not be issued for a period 
longer than 1 year, nor will it be issued retroactively. It shall 
specify its effective and expiration dates. A copy of the certificate 
shall be posted during its effective period in a conspicuous place or 
places in the institution of higher education readily visible to all 
employees, for example, adjacent to the time clock or on the bulletin 
board used for notices to the employees. If temporary authorization is 
in effect under paragraph (a) of Sec. 519.14, a notice thereof shall be 
similarly posted during the effective period of such authorization.
    (b) Full-time students may not be employed under a certificate at 
less than 85 percent of the minimum wage applicable under section 6 of 
the Act.
    (c) An institution of higher education shall not employ full-time 
students at subminimum wages under this subpart in unrelated trades or 
businesses as defined and applied under sections 511 through 515 of the 
Internal Revenue Code, such as apartment houses, stores, or other 
businesses not primarily catering to the students of the institution.
    (d) An institution of higher education subject to a finding by the 
Secretary that it is in violation of the requirements of section 
14(b)(3) of the Act or of this subpart must be issued a full-time 
student certificate before it can employ full-time students at wages 
below those required by section 6 of the Act. The Administrator or his/
her authorized representative will not issue a full-time student 
certificate to such an institution without adequate assurances and 
safeguards to insure that the violations found by the Secretary will not 
continue.

[[Page 123]]

    (e) Full-time students shall not be permitted to work at subminimum 
wages for more than 8 hours a day, nor for more than 40 hours a week 
when school is not in session, nor more than 20 hours a week when school 
is in session (apart from a full-time student's summer vacation), except 
that when a full-day school holiday occurs the weekly limitation on the 
maximum hours which may be worked shall be increased by 8 hours for each 
such holiday but in no event shall the 40-hour limitation be exceeded. 
(Note: School is considered to be in session for a student taking one or 
more courses during a summer or other vacation.) Whenever a full-time 
student is employed for more than 20 hours in any workweek in 
conformance with this paragraph, the employer shall note in his/her 
payroll that school was not in session during all or part of that 
workweek or the student was in his/her summer vacation.
    (f) Neither oppressive child labor as defined in section 3(1) of the 
Act and regulations issued under the Act nor any other employment in 
violation of a Federal, State or local child labor law or ordinance 
shall come within the terms of any certificate issued under this 
subpart.
    (g) Full-time students shall be employed at subminimum wages under 
this subpart only outside of their school hours, i.e., only outside of 
the scheduled hours of instruction of the individual full-time student.
    (h) No full-time student shall be hired under a full-time student 
certificate for work in a unit or units of the campus where abnormal 
labor conditions, such as a strike or lockout, exist.
    (i) No provision of any full-time student certificate shall excuse 
noncompliance with higher standards applicable to full-time students 
which may be established under the Walsh-Healey Public Contracts Act or 
any other Federal law, State law, local ordinance, or union or other 
agreement. Thus, certificates issued under this subpart have no 
application to employment under the Service Contract Act.
    (j) No full-time student certificate shall apply to any employee to 
whom a certificate issued under section 14(a) or (c) of the Act has 
application.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975]



Sec. 519.17  Records to be kept.

    (a) The employer shall designate each worker employed as a full-time 
student under a full-time student certificate at subminimum wages, as 
provided under part 516 of this chapter.
    (b)(1) In addition to the records required under part 516 of this 
chapter and this subpart, the employer shall keep the records specified 
in paragraphs (b)(2) and (3) of this section specifically relating to 
full-time students employed at subminimum wages.
    (2) The institution shall obtain at the time of hiring and keep in 
its records information that the employee is its full-time student at 
the physical location of the institution in accordance with its accepted 
definition of a full-time student. During a period between attendance at 
different schools not longer than the usual summer vacation, the 
acceptance by the institution of the full-time student for its next term 
will satisfy the requirements of (b)(2) of this section.
    (3) An institution of higher education shall maintain records 
showing the total number of all full-time students of the type defined 
in Sec. 519.12(a) employed at the campus of the institution at less than 
the minimum wage otherwise applicable under the Act, and the total 
number of all employees at the campus to whom the minimum wage provision 
of the Act applies.
    (c) The records required in this section, including a copy of any 
full-time student certificate issued, shall be kept for a period of 3 
years at the place and made available for inspection, both as provided 
in part 516 of this chapter.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975]



Sec. 519.18  Amendment or replacement of a full-time student certificate.

    In the absence of an objection by the employer (which may be 
resolved in the manner provided in part 528 of this chapter) the 
authorized officer upon his/her own motion may amend the provisions of a 
certificate when it is

[[Page 124]]

necessary by reason of the amendment of these regulations, or may 
withdraw a certificate and issue a replacement certificate when 
necessary to correct omissions or apparent defects in the original 
certificates.



Sec. 519.19  Reconsideration and review.

    (a) Within 15 days after being informed of a denial of an 
application for a full-time student certificate or within 45 days after 
Federal Register publication of a statement of the terms of the 
certificate granted, (subsequent to April 30, 1976, within 60 days after 
a certificate is granted), any person aggrieved by the action of an 
authorized officer in denying or granting a certificate may:
    (1) File a written request for reconsideration thereof by the 
authorized officer who made the decision in the first instance, or
    (2) File with the Administrator a written request for review.
    (b) A request for reconsideration shall be accompanied by a 
statement of the additional evidence which the applicant believes may 
materially affect the decision and a showing that there were reasonable 
grounds for failure to present such evidence in the original 
proceedings.
    (c) Any person aggrieved by the reconsideration of an authorized 
officer may, within 15 days after such determination, file with the 
Administrator a written request for review.
    (d) A request for review shall be granted where reasonable grounds 
for the review are set forth in the request.
    (e) If a request for reconsideration or review is granted, the 
authorized officer or the Administrator may, to the extent he/she deems 
it appropriate, afford other interested persons an opportunity to 
present data, views, or argument.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975]



Sec. 519.20  Amendment or revocation of the regulations in this subpart.

    The Administrator may at any time upon his/her own motion or upon 
written request of any interested person or persons setting forth 
reasonable grounds therefor, and after opportunity has been given to 
interested persons to present data, views, or argument, amend or revoke 
any of the regulations of this subpart.



PART 520--EMPLOYMENT UNDER SPECIAL CERTIFICATE OF MESSENGERS, LEARNERS 
(INCLUDING STUDENT-LEARNERS), AND APPRENTICES--Table of Contents




Subpart A [Reserved]

 Subpart B--What Are the General Provisions Governing the Employment of 
 Messengers, Learners (Including Student-Learners), and Apprentices at 
                            Subminimum Wages?

Sec.
520.200  What is the legal authority for payment of wages lower than the 
          minimum wage required by section 6(a) of the Fair Labor 
          Standards Act?
520.201  How are those classifications of workers which may be paid 
          subminimum wages under section 14(a) of the Fair Labor 
          Standards Act defined?
520.202  How do persons who want to apply for a particular certificate 
          find out what is needed?
520.203  What records does an employer have to keep when subminimum wage 
          certificates are granted? How long do they have to be kept?
520.204  If someone does not agree with the Department of Labor's 
          decision on a certificate, can the decision be appealed?
520.205  How do these rules affect other Federal, state and local laws 
          and collective bargaining agreements?

                         Subpart C--Definitions

520.300  Definitions.

   Subpart D--Messengers, Learners (Excluding Student-Learners), and 
                               Apprentices

520.400  Who are messengers, learners, and apprentices?
520.401  Are there any industries, occupations, etc. that do not qualify 
          for a certificate to employ messengers, learners, or 
          apprentices at subminimum wages?
520.402  How do I obtain authority to employ messengers, learners, or 
          apprentices at subminimum wages?
520.403  What information is required when applying for authority to pay 
          less than the minimum wage?
520.404  What must I demonstrate in my application for a messenger, 
          learner, or apprentice certificate to receive a favorable 
          review?

[[Page 125]]

520.405  Must I notify my employees that I am applying for a certificate 
          to employ messengers and/or learners at subminimum wages?
520.406  What happens once I have submitted my request for authorization 
          to pay messengers, learners, or apprentices subminimum wages?
520.407  What is the subminimum wage for messengers and what must I do 
          to comply with the terms of my certificate?
520.408  What is the subminimum wage for learners and what must I do to 
          comply with the terms of my certificate?
520.409  When will authority to pay apprentices special minimum wages 
          become effective and what is the special minimum wage rate?
520.410  How long does a messenger, learner, or apprentice certificate 
          remain in effect?
520.411  Does a certificate authorizing payment of subminimum wages to 
          messengers and/or learners remain in effect during the renewal 
          process?
520.412  What records, in addition to those required by Part 516 of this 
          chapter and section 520.203 of this part, must I keep relating 
          to the employment of messengers, learners, or apprentices 
          under special certificate?

                       Subpart E--Student-Learners

520.500  Who is a student-learner?
520.501  How do I obtain authority to employ student-learners at 
          subminimum wages?
520.502  What information must an application to employ student-learners 
          at subminimum wages contain?
520.503  What must I demonstrate in my application for a student-learner 
          certificate to receive a favorable review?
520.504  When will authority to pay student-learners subminimum wages 
          become effective?
520.505  How will I be notified that my request to employ student-
          learners at subminimum wages has been denied and can I appeal 
          the denial?
520.506  What is the subminimum wage for student-learners and what must 
          I do to comply with the terms of my student-learner 
          certificate?
520.507  How long does my certificate remain in effect?
520.508  What records, in addition to those required by Part 516 of this 
          chapter and section 520.203 of this part, must I keep when 
          student-learners are employed?

    Authority: Sec. 14, 52 Stat. 1062, 1064 (29 U.S.C. 214); secs. 2-12, 
60 Stat. 237-244; (5 U.S.C. 1001-1011); 52 Stat. 1068, as amended, 29 
U.S.C. 214.

    Source: 62 FR 64959, Dec. 9, 1997, unless otherwise noted.

Subpart A [Reserved]



 Subpart B--What are the General Provisions Governing the Employment of 
 Messengers, Learners (Including Student-Learners), and Apprentices at 
                            Subminimum Wages?



Sec. 520.200  What is the legal authority for payment of wages lower than 
the minimum wage required by section 6(a) of the Fair Labor Standards Act?

    Section 14(a) of the Fair Labor Standards Act provides, in order to 
prevent curtailment of employment opportunities, for the payment of 
special minimum wage rates to workers employed as messengers, learners 
(including student-learners), and apprentices under special certificates 
issued by the Department of Labor.



Sec. 520.201  How are those classifications of workers which may be paid 
subminimum wages under section 14(a) of the Fair Labor Standards Act defined?

    (a) A messenger is a worker who is primarily engaged in delivering 
letters and messages for a firm whose principal business is the delivery 
of such letters and messages.
    (b) A learner is a worker who is being trained for an occupation, 
which is not customarily recognized as an apprenticeable trade, for 
which skill, dexterity and judgment must be learned and who, when 
initially employed, produces little or nothing of value. Except in 
extraordinary circumstances, an employee cannot be considered a 
``learner'' once he/she has acquired a total of 240 hours of job-related 
and/or vocational training with the same or other employer(s) or 
training facility(ies) during the past three years. An individual 
qualifying as a ``learner'' may only be trained in two qualifying 
occupations.
    (c) A student-learner is a student who is at least sixteen years of 
age, or at least eighteen years of age if employed in an occupation 
which the Secretary has declared to be particularly hazardous, who is 
receiving instruction in an accredited school, college or university and 
who is employed on a part-

[[Page 126]]

time basis, pursuant to a ``bona fide vocational training program'' as 
defined in subpart C of this part.
    (d) An apprentice is a worker, at least sixteen years of age unless 
a higher minimum age standard is otherwise fixed by law, who is employed 
to learn a skilled trade through a registered apprenticeship program. 
Training is provided through structured on-the-job training combined 
with supplemental related theoretical and technical instruction. This 
term excludes pre-apprentices, trainees, learners, and student-learners. 
The terms learner and student-learner are defined in subpart C of this 
part. Standards governing the registration of apprenticeship programs 
are established and administered by the U.S. Department of Labor, 
Employment and Training Administration, Bureau of Apprenticeship and 
Training (BAT) and are found in Regulations, 29 CFR Part 29.
    (e) Additional terms used in this part are defined in subpart C of 
this part.



Sec. 520.202  How do persons who want to apply for a particular certificate 
find out what is needed?

    The application process, terms, conditions and requirements of 
certificates and other matters are discussed in subparts D and E of this 
part. Messengers, learners (excluding student-learners), and apprentices 
are discussed in subpart D of this part and student-learners in subpart 
E of this part.



Sec. 520.203  What records does an employer have to keep when subminimum 
wage certificates are granted? How long do they have to be kept?

    (a) In addition to other records required under the recordkeeping 
requirements (part 516 of this chapter), the employer is required to 
keep records specific to certification under section 14(a) of the Fair 
Labor Standards Act. All workers employed under a subminimum wage 
certificate shall be designated as such on the employer's payroll 
records. Further recordkeeping requirements are described in each 
applicable subpart of this part (see Secs. 520.412 and 520.508 of this 
part).
    (b) Employers must maintain and preserve all required records for at 
least three years from the last date of employment under a subminimum 
wage program. The employer's copy of the application and the certificate 
shall also be maintained for three years. Such records shall be kept 
secure and accessible at the place of employment or where payroll 
records are customarily maintained. All records must be available for 
inspection and copying by the Administrator.



Sec. 520.204  If someone does not agree with the Department of Labor's 
decision on a certificate, can the decision be appealed?

    (a) Any person, applicant, trade union, association, etc. who does 
not agree with action granting or denying a certificate (pursuant to 
Secs. 520.406 and 520.505) may, within 60 days of that action or such 
additional time as the Administrator may allow, file with the 
Administrator a petition for review. The decision of the Administrator 
becomes final unless such a written request is timely filed.
    (b) Such requests should contain a statement of the additional 
evidence which the person believes may materially affect the decision 
and establish that there were reasonable grounds for failure to present 
such evidence during the original certification process.
    (c) If a request for reconsideration or review is granted, the 
Administrator, to the extent it is deemed appropriate, may afford other 
interested persons an opportunity to present data and views.
    (d) The Administrator may conduct an investigation, which may 
include a hearing, prior to taking any action pursuant to this part.



Sec. 520.205  How do these rules affect other Federal, state and local 
laws and collective bargaining agreements?

    No provision of this part, or of any special minimum wage 
certificate issued thereunder, shall excuse noncompliance with any other 
Federal or state law or municipal ordinance or collective bargaining 
agreement establishing higher standards.

[[Page 127]]



                         Subpart C--Definitions



Sec. 520.300  Definitions.

    Administrator means the Administrator of the Wage and Hour Division, 
Employment Standards Administration, United States Department of Labor, 
or his/her authorized representative.
    Apparel industry means the manufacturing of the following products 
as referred to in subpart D of this part:
    (1) Rainwear means the manufacture of waterproofed garments and 
raincoats from oiled cloth or other materials, whether vulcanized, 
rubberized, cravenetted, or otherwise processed.
    (2) Leather and sheep-lined clothing means the manufacture of 
leather, leather-trimmed and sheeplined garments for men, women or 
children.
    (3) Women's apparel division of the apparel industry for the 
manufacture of women's, misses', and juniors' dresses means the 
production of women's, misses' and juniors' dresses; washable service 
garments; blouses from woven or purchased knit fabric; women's, misses', 
children's and infants' underwear, nightwear and negligees from woven 
fabrics; corsets and other body supporting garments from any material; 
infants' and children's outerwear; and other garments similar to them.
    (4) Robes, means the manufacture of robes from any woven material or 
from purchased knitted materials, including, without limitation, men's, 
women's and children's bath, lounging and beach robes and dressing 
gowns.
    Apprentice means a worker, at least sixteen years of age unless a 
higher minimum age standard is otherwise fixed by law, who is employed 
to learn a skilled trade through a registered apprenticeship program. 
Training is provided through structured on-the-job training combined 
with supplemental related theoretical and technical instruction. This 
term excludes pre-apprentices, trainees, learners, and student-learners. 
The terms learner and student-learner are defined in this subpart.
    Apprenticeship agreement means a written agreement between an 
apprentice and either his/her employer, or an apprenticeship committee 
acting as agent for employer(s), which contains the terms and conditions 
of the employment and training of the apprentice.
    Apprenticeship committee means those persons designated by the 
sponsor to act for it in the administration of the program. A committee 
may be ``joint'', i.e., it is composed of an equal number of 
representatives of the employer(s) and of the employees represented by a 
bona fide collective bargaining agent(s) and has been established to 
conduct, operate, or administer an apprenticeship program and enter into 
apprenticeship agreements with apprentices. A committee may be 
``unilateral'' or ``non-joint'' and shall mean a program sponsor in 
which a bona fide collective bargaining agent is not a participant.
    Apprenticeship program means a plan containing all terms and 
conditions for the qualification, recruitment, selection, employment and 
training of apprentices, including such matters as the requirements for 
a written apprenticeship agreement.
    BAT means the Bureau of Apprenticeship and Training, Employment and 
Training Administration, United States Department of Labor.
    Bona fide vocational training program means a program authorized and 
approved by a state board of vocational education or other recognized 
educational body that provides for part-time employment training which 
may be scheduled for a part of the work day or workweek, for alternating 
weeks or for other limited periods during the year, supplemented by and 
integrated with a definitely organized plan of instruction designed to 
teach technical knowledge and related industrial information given as a 
regular part of the student-learner's course by an accredited school, 
college, or university.
    Department means the United States Department of Labor.
    Experienced worker means a worker whose total experience in an 
authorized learner occupation in the industry, including vocational 
training, within the past three years is equal to or greater than 240 
hours or such other period as authorized by a learner certificate issued 
pursuant to the regulations in this part.

[[Page 128]]

    Experienced worker available for employment means an experienced 
worker residing within the area from which the plant/business 
customarily draws its labor supply or within a reasonable commuting 
distance of such area, and who is willing and able to accept employment 
in the plant/business; or an experienced worker residing outside of the 
area from which the plant/business customarily draws its labor supply, 
who has in fact made himself or herself available for employment at the 
plant/business.
    FLSA means the Fair Labor Standards Act of 1938 as amended (29 
U.S.C. 201 et seq.).
    Learner means a worker who is being trained for an occupation, which 
is not customarily recognized as an apprenticeable trade, for which 
skill, dexterity and judgment must be learned and who, when initially 
employed produces little or nothing of value. Except in extraordinary 
circumstances, an employee cannot be considered a ``learner'' once he/
she has acquired a total of 240 hours of job-related and/or vocational 
training with the same or other employer(s) or training facility(ies) 
during the past three years. An individual qualifying as a ``learner'' 
may only be trained in two qualifying occupations.
    Learning period means a period of time measured in work hours and 
vocational training hours that is normally required to fully train an 
inexperienced worker in a particular occupation within an industry where 
the learner is employed. The learning period will not exceed 240 hours 
for any qualifying occupation except in extraordinary circumstances 
where the employer demonstrates that the occupation to be learned 
requires an extended period of specialized training.
    Men's and boys' clothing industry means the industry which 
manufactures men's, youths', and boys' suits, coats, and overcoats.
    Messenger means a worker who is primarily engaged in delivering 
letters and messages for a firm whose principal business is the delivery 
of such letters and messages.
    Minimum wage means the wage rate required by section 6 of FLSA. For 
purposes of this part, subminimum wage rates are based exclusively on 
the applicable minimum wage provided by section 6(a) of FLSA.
    Recognized apprenticeship agency means either a state apprenticeship 
agency recognized by the BAT, or if no such apprenticeship agency exists 
in the state, the BAT.
    Registered apprenticeship program or agreement means a program or 
agreement which has been approved by a recognized apprenticeship agency 
as meeting the basic standards of apprenticeship adopted and published 
by BAT.
    Secretary or Secretary of Labor means the Secretary of Labor, United 
States Department of Labor or his/her authorized representative.
    Shoe manufacturing industry means the manufacture or partial 
manufacture of footwear from any material and by any process except 
knitting, vulcanizing of the entire article or vulcanizing (as distinct 
from cementing) of the sole to the upper, including the manufacturing of 
the following: athletic shoes; boots; boot tops; burial shoes; custom-
made boots or shoes; moccasins; puttees, except spiral puttees; sandals; 
shoes completely rebuilt in a shoe factory; slippers. This term also 
includes the manufacture from leather or from any shoe-upper material of 
all cut stock and findings for footwear, including bows, ornaments, and 
trimmings. It also includes the manufacture of cutsoles; midsoles; 
insoles; taps; lifts; rands; toplifts; bases; shanks; boxtoes; counters; 
stays; stripping; sock linings; and heel pads. Shoe manufacturing also 
includes the manufacture of heels from any material except molded 
rubber, but not including the manufacture of woodheel blocks; the 
manufacture of cut upper parts for footwear, including linings, vamps 
and quarters; and the manufacture of pasted shoe stock; as well as the 
manufacture of boot and shoe patterns. However, the manufacture of cut 
stock and findings is included within this definition only when 
performed by companies engaged in the production of shoes who 
incorporate most of the cut stock and findings in the manufacture of 
their product(s).
    Skilled trade means an apprenticeable occupation which possesses all 
of the following characteristics:

[[Page 129]]

    (1) It is customarily learned in a practical way through a 
structured, systematic program of on-the-job supervised training.
    (2) It is clearly identified and commonly recognized throughout an 
industry.
    (3) It involves manual, mechanical or technical skills and knowledge 
which require a minimum of 2,000 hours of on-the-job work experience.
    (4) It requires related instruction to supplement the on-the-job 
training.
    (5) It is not merely a part of an apprenticeable occupation and does 
not fall into any of the following categories: marketing; sales 
administration; administrative support; executive and managerial; 
professional and semi-professional occupations (this category covers 
occupations for which entrance requirements customarily include 
education of college level).
    Standards of apprenticeship means the apprenticeship program is an 
organized, written plan embodying the terms and conditions of 
employment, training, and supervision of one or more apprentices in the 
apprenticeable occupation, which meets the requirements established by 
BAT, and is subscribed to by a sponsor who has undertaken to carry out 
the apprentice training program.
    State means any state of the United States or the District of 
Columbia or any territory or possession of the United States.
    Student-learner means a student who is at least sixteen years of 
age, or at least eighteen years of age if employed in an occupation 
which the Secretary has declared to be particularly hazardous, who is 
receiving instruction in an accredited school, college or university and 
who is employed by an establishment on a part-time basis, pursuant to a 
bona fide vocational training program.
    Subminimum wage means the rates which may be paid under temporary 
authorization or under certificate as provided by section 14(a) of FLSA 
and this part.
    Vocational Training Program. See ``Bona fide vocational training 
program''.
    Wage and Hour Division means the Wage and Hour Division, Employment 
Standards Administration, United States Department of Labor.



   Subpart D--Messengers, Learners (Excluding Student-Learners), and 
                               Apprentices



Sec. 520.400  Who are messengers, learners, and apprentices?

    The terms messenger, learner, and apprentice are defined in subpart 
C of this part.



Sec. 520.401  Are there any industries, occupations, etc. that do not qualify 
for a certificate to employ messengers, learners, or apprentices at subminimum 
          wages?

    (a) Certificates to employ messengers at subminimum wages are 
available to only those establishments engaged in the business of 
providing messenger service, i.e., the delivery of letters and messages. 
Requests for such certificates are uniformly denied to applicants whose 
principal business purpose is not the delivery of messages and letters.
    (b) All applications for special certificates authorizing the 
employment of learners at subminimum wage rates in the manufacture of 
products in the following industries shall be denied (definitions for 
all listed activities can be found in subpart C of this part):
    (1) In the apparel industry:
    (i) Rainwear
    (ii) Leather and sheep-lined clothing
    (iii) Women's apparel division of the apparel industry for the 
manufacture of women's misses', and juniors' dresses;
    (iv) Robes
    (2) Shoe manufacturing industry
    (3) Men's and boys' clothing industry.
    (c) No certificates will be granted authorizing the employment of 
learners at subminimum wage rates as homeworkers; in maintenance 
occupations such as guard, porter, or custodian; in office and clerical 
occupations in any industry; or in operations of a temporary or sporadic 
nature.
    (d) Authorization to employ apprentices at subminimum wages will 
only be granted if permitted by the BAT regulations (29 CFR Part 29).

[[Page 130]]



Sec. 520.402  How do I obtain authority to employ messengers, learners, or 
apprentices at subminimum wages?

    (a) Employers wishing to employ messengers, learners, or apprentices 
as defined in subpart C of this part at subminimum wages must apply for 
authority to do so from the Administrator at the Wage and Hour 
Division's Regional Office having administrative jurisdiction over the 
geographic area in which the employment is to take place. To obtain the 
address of the Regional Office which services your geographic area, 
please contact your local Wage and Hour Office (under ``Department of 
Labor'' in the blue pages of your local telephone book).
    (b) In the case of messengers, such application may be filed by an 
employer or group of employers. Preferential consideration will be given 
to applications filed by groups or organizations which are deemed to be 
representative of the interests of a whole industry or branch thereof.



Sec. 520.403  What information is required when applying for authority to 
pay less than the minimum wage?

    (a) A separate application must be made for each plant or 
establishment requesting authorization for employment of messengers and/
or learners at subminimum wages, on the official form furnished by the 
Wage and Hour Division, containing all information required by the form 
including:
    (1) Information concerning efforts made by the applicant to obtain 
experienced workers in occupation(s) for which learners are requested;
    (2) The occupations/industry in which the messenger(s) and/or 
learner(s) are to be employed;
    (3) A statement explaining why employment of messenger(s) and/or 
learners(s) at subminimum wages is needed to prevent curtailment of 
employment opportunities;
    (4) The number of messengers and/or learners the applicant 
anticipates employing at subminimum wages under special certificate;
    (5) If requesting authorization for the employment of learners at 
subminimum wages for a learning period greater than 240 hours, 
information pertinent to the extraordinary circumstances necessitating 
such a request. While each such request will be considered on its own 
merit, it is anticipated that such authorizations would be limited to 
occupations requiring an extended period of specialized training;
    (6) The number of messengers and/or learners hired at subminimum 
wages during the twelve-month period prior to making application;
    (7) Total number of nonsupervisory workers in the particular plant 
or establishment for which a certificate is requested;
    (8) The number of experienced workers in the learner occupations and 
their straight-time average hourly earnings during the last payroll 
period and the corresponding payroll period in the prior year; and
    (9) The type of equipment to be used by learners.
    (b) For apprentices, the employer or apprenticeship committee must 
submit a copy of the registered apprenticeship program.
    (c) Any applicant may also submit such additional information as may 
be pertinent. Applications which fail to provide the information 
required by the form may be returned to the applicant with a notation of 
deficiencies and without prejudice against submission of a new or 
revised application.

(The information collection requirements contained in paragraphs (a), 
(b) and (c) were approved by the Office of Management and Budget under 
control number 1215-0192.)



Sec. 520.404  What must I demonstrate in my application for a messenger, 
learner, or apprentice certificate to receive a favorable review?

    (a) The application must demonstrate that a certificate is necessary 
in order to prevent the curtailment of opportunities for employment.
    (b) The issuance of a messenger and/or learner certificate must not 
tend to create unfair competitive labor cost advantages nor have the 
effect of impairing or depressing wage rates or working standards of 
experienced workers performing work of a like or comparable character in 
the industry.
    (c) Abnormal labor conditions such as a strike, lock-out, or other 
similar condition, must not exist at the plant

[[Page 131]]

or establishment for which a messenger and/or learner certificate is 
requested.
    (d) It must be shown that an adequate supply of qualified 
experienced workers is not available for employment in those occupations 
for which authorization to pay subminimum wages to learners has been 
requested; that the experienced workers presently employed in the plant 
or establishment in occupations in which learners are requested are 
afforded an opportunity, to the fullest extent possible, for full-time 
employment upon completion of the learning period; and that learners are 
available for employment.
    (e) Reasonable efforts must have been made to recruit workers paid 
at least the minimum wage in those occupations in which certificates to 
employ learners at subminimum wages have been requested. This includes 
the placement of an order with the local State or Territorial Public 
Employment Service Office (except in possessions where there is no such 
office) not more than fifteen days prior to the date of application. 
Written evidence from such office that the order has been placed shall 
be submitted by the employer with the application.
    (f) The occupation or occupations in which learners are to receive 
training must involve a sufficient degree of skill to necessitate an 
appreciable learning period.
    (g) An apprenticeship program must conform with or substantially 
conform with the standards of apprenticeship as defined in subpart C of 
this part.
    (h) There must be no serious outstanding violations involving the 
employee(s) for whom a certificate is being requested nor any serious 
outstanding violations of a certificate previously issued, nor any 
serious violations of the FLSA which provide reasonable grounds to 
conclude that the terms of a certificate may not be complied with, if 
issued.



Sec. 520.405  Must I notify my employees that I am applying for a 
certificate to employ messengers and/or learners at subminimum wages?

    Upon making application for a messenger and/or learner certificate 
or for renewal thereof, an employer shall post a copy of the first page 
of the completed application form in a conspicuous place in each 
department of the plant or establishment where he/she proposes to employ 
messengers and/or learners at subminimum wage rates. Such notice shall 
remain posted until the application is acted upon by the Administrator.

(The information collection requirements contained in paragraphs (a), 
(b) and (c) were approved by the Office of Management and Budget under 
control number 1215-0192.)



Sec. 520.406  What happens once I have submitted my request for 
authorization to pay messengers, learners, or apprentices subminimum 
wages?

    (a) All applications submitted for authorization to pay wages lower 
than those required by section 6(a) of the FLSA will be considered and 
acted upon (issued or denied) subject to the conditions specified in 
Secs. 520.403 and 520.404 of this part.
    (b) If, in the case of messengers and/or learners, available 
information indicates that the requirements of this part are satisfied, 
the Administrator shall issue a special certificate which will be mailed 
to the employer. If a special certificate is denied, the employer shall 
be given written notice of the denial. If a messenger and/or learner 
certificate is denied, notice of such denial shall be without prejudice 
to the filing of any subsequent application.
    (c) If, in the case of apprentices, the apprenticeship agreement and 
other available information indicate that the requirements of this part 
are satisfied, the Administrator shall issue a special certificate. The 
special certificate, if issued, shall be mailed to the employer or the 
apprenticeship committee and a copy shall be mailed to the apprentice. 
If a special certificate is denied, the employer or the apprenticeship 
committee, the apprentice and the recognized apprenticeship agency shall 
be given written notice of the denial. The employer shall pay the 
apprentice the minimum wage applicable under section 6(a) of the FLSA 
from the date of receipt of notice of such denial.

[[Page 132]]



Sec. 520.407  What is the subminimum wage for messengers and what must 
I do to comply with the terms of my certificate?

    (a) A messenger certificate, if issued, shall specify:
    (1) The subminimum wage rate of not less than 95 percent of the 
applicable minimum wage required by section 6(a) of the FLSA; and
    (2) The effective and expiration dates of the certificate.
    (b) The employer shall post a copy of the messenger certificate 
during its effective period in a conspicuous place where it can be 
readily seen by employees.
    (c) No messenger shall be hired under a messenger certificate while 
abnormal labor conditions such as a strike, lock-out, or other similar 
condition, exist.



Sec. 520.408  What is the subminimum wage for learners and what must I do 
to comply with the terms of my certificate?

    (a) All learner certificates shall specify:
    (1) The subminimum wage rate of not less than 95 percent of the 
applicable minimum wage required by section 6(a) of the FLSA;
    (2) The number or proportion of learners authorized to be employed 
on any one day;
    (3) The occupations in which learners may be employed;
    (4) The authorized learning period of not more than 240 hours, 
except in extraordinary situations as discussed in Sec. 520.403; and
    (5) The effective and expiration dates of the certificate.
    (b) Learners properly hired prior to the date on which a learner 
certificate expires may be continued in employment at subminimum wage 
rates for the duration of their authorized learning period under the 
terms of the certificate, even though the certificate may expire before 
the learning period is completed.
    (c) The employer shall post a copy of the learner certificate during 
its effective period and thereafter until all authorized learners have 
completed their learning period(s). The certificate shall be posted in a 
conspicuous place in each department of the plant where learners are to 
be employed.
    (d) No learners shall be hired under a learner certificate if, at 
the time the employment begins, experienced workers capable of equaling 
the performance of a worker of minimum acceptable skill are available 
for employment. Before hiring learners during the effective period of 
the certificate, the employer shall place an order for experienced 
workers with the local State or Territorial Public Employment Service 
Office (except in possessions where there is no such office) or have 
such an active order on file. Written evidence that an order has been 
placed or is on active file shall be maintained in the employer's 
records.
    (e) No learner shall be hired under a learner certificate while 
abnormal labor conditions such as a strike, lock-out, or other similar 
condition exist in the plant or establishment.
    (f) For each individual learner, the number of hours of previous 
employment and hours of vocational or similar facility(ies) training 
must be deducted from the authorized learning period if within the past 
three years the learner has been employed or received vocational 
training in a given occupation and industry.
    (g) If experienced workers are paid on a piece rate basis, learners 
shall be paid at least the same piece rates as experienced workers 
employed on similar work in the plant and shall receive earnings based 
on such piece rates whenever such earnings exceed the subminimum wage 
rates permitted in the certificate.



Sec. 520.409  When will authority to pay apprentices special minimum wages 
become effective and what is the special minimum wage rate?

    (a) An apprenticeship program which has been registered with a 
recognized apprenticeship agency shall constitute a temporary special 
certificate authorizing the employment of an apprentice at the wages and 
under the conditions specified in such program until a special 
certificate is issued or denied. This temporary authorization is, 
however, conditioned on the requirement that within 90 days from the 
beginning date of employment of the apprentice, the

[[Page 133]]

employer or the apprenticeship committee shall send one copy of each 
apprenticeship agreement, with evidence of registration, to the 
appropriate Regional Office of the Wage and Hour Division.
    (b) The wage rate specified by the apprenticeship program becomes 
the special minimum wage rate that must be paid unless the Administrator 
issues a certificate modifying the terms and conditions of employment of 
apprentices at special minimum wages.



Sec. 520.410  How long does a messenger, learner, or apprentice certificate 
remain in effect?

    (a) Messenger and/or learner certificates may be issued for a period 
of not longer than one year.
    (b) Each special apprentice certificate shall specify the conditions 
and limitations under which it is granted, including the periods of time 
during which subminimum wage rates may be paid pursuant to a registered 
apprenticeship program.
    (c) No certificate may be issued retroactively.
    (d) The Administrator may amend the provisions of a certificate when 
necessary to correct omissions or defects in the original certificate or 
reflect changes in this part.



Sec. 520.411  Does a certificate authorizing payment of subminimum wages to 
messengers and/or learners remain in effect during the renewal process?

    (a) Application for renewal of a messenger and/or learner 
certificate shall be made on the same form as described in this section 
and employees shall be advised of such renewal application in the same 
manner as explained in Sec. 520.405. No effective messenger and/or 
learner certificate shall expire until action on an application for 
renewal shall have been finally determined, provided that such 
application has been properly executed in accordance with the 
requirements, and filed with and received by the Administrator not less 
than fifteen nor more than thirty days prior to the expiration date. A 
final determination means either the granting of or initial denial of 
the application for renewal of a messenger and/or learner certificate, 
or withdrawal of the application. A ``properly executed application'' is 
one which contains the complete information required on the form, and 
the required certification by the applicant.
    (b) A renewal certificate will not be issued unless there is a clear 
showing that the conditions set forth in section 520.404 of this part 
still prevail.



Sec. 520.412  What records, in addition to those required by Part 516 of 
this chapter and section 520.203 of this part, must I keep relating to 
the employment 
          of messengers, learners, or apprentices under special 
          certificate?

    (a) Each worker employed as a messenger, learner, or apprentice 
under a certificate shall be designated as such on the employer's 
payroll records. All such messengers, learners, or apprentices shall be 
listed together as a separate group on the payroll records, with each 
messenger's, learner's, or apprentice's occupation being shown.
    (b) At the time learners are hired, the employer shall also obtain 
and keep in his/her records a statement signed by each employee showing 
all applicable experience which the learner had in the employer's 
industry, including vocational training, during the preceding three 
years. The statement shall contain the dates of such previous 
employment, names and addresses of employers, the occupation or 
occupations in which the learner was engaged and the types of products 
upon which the learner worked. The statement shall also contain 
information concerning pertinent training in vocational training schools 
or similar training facilities, including the dates of such training and 
the identity of the vocational school or training facility. If the 
learner has had no applicable experience or pertinent training, a 
statement to that effect signed by the learner shall likewise be kept in 
the employer's records.
    (c) The employer shall maintain a file of all evidence and records, 
including any correspondence, pertaining to the filing or cancellation 
of job orders placed with the local State or Territorial Public 
Employment Service Office pertaining to job orders for occupations to be 
performed by learners.

[[Page 134]]

    (d) Every employer who employs apprentices under temporary or 
special certificates shall preserve for three years from the last 
effective date of the certificate copies of the apprenticeship program, 
apprenticeship agreement and special certificate under which such an 
apprentice is employed.
    (e) Every apprenticeship committee which holds a certificate under 
this part shall keep the following records for each apprentice under its 
control and supervision:
    (1) The apprenticeship program, apprenticeship agreement and special 
certificate under which the apprentice is employed by an employer;
    (2) The cumulative amount of work experience gained by the 
apprentice, in order to establish the proper wage at the time of his/her 
assignment to an employer; and
    (3) A list of the employers to whom the apprentice was assigned and 
the period of time he/she worked for each employer.
    (f) The records required in this section, including a copy of the 
application(s) submitted and any special certificate(s) issued, shall be 
kept and made available for inspection for at least three years from the 
expiration date of the certificate(s).



                       Subpart E--Student-Learners



Sec. 520.500  Who is a student-learner?

    The term student-learner is defined in subpart C.



Sec. 520.501  How do I obtain authority to employ student-learners at 
subminimum wages?

    (a) Employers wishing to employ student-learners at subminimum wages 
must apply for authority to do so from the Administrator at the Wage and 
Hour Division's Regional Office having administrative jurisdiction over 
the geographic area in which the employment is to take place. To obtain 
the address of the Regional Office which services your geographic area, 
please contact your local Wage and Hour Office (under ``Department of 
Labor'' in the blue pages of your local telephone book).
    (b) Application must be made on the official form furnished by the 
Wage and Hour Division and must be signed by the employer, the 
appropriate school official and the student-learner. A separate 
application must be filed by the employer for each student-learner the 
employer proposes to employ at subminimum wages.

(The information collection requirements contained in paragraph (b) were 
approved by the Office of Management and Budget under control number 
1215-0192.)



Sec. 520.502  What information must an application to employ student-learners 
at subminimum wages contain?

    Student-learner applications must contain:
    (a) A statement clearly outlining the vocational training program 
and showing, particularly, the processes in which the student-learner 
will be engaged when in training on the job;
    (b) A statement clearly outlining the school instruction directly 
related to the job;
    (c) The total number of workers employed in the establishment;
    (d) The number and hourly wage rates of experienced workers employed 
in the occupation in which the student-learner is to be trained;
    (e) The hourly wage rate or progressive wage schedule which the 
employer proposes to pay the student-learner;
    (f) The age of the student-learner;
    (g) The period of employment training at subminimum wages;
    (h) The number of hours of employment training a week and the number 
of hours of school instruction a week;
    (i) A certification by the appropriate school official that the 
student named on the application form will be receiving instruction in 
an accredited school, college, or university and will be employed 
pursuant to a bona fide vocational training program, as defined in 
subpart C of this part. The certification by the school official must 
satisfy the following conditions:
    (1) The application must be properly executed in conformance with 
Sec. 520.501 of this subpart;
    (2) The employment training must conform with the provisions of 
Sec. 520.503 (a), (c), (d), and (g) and paragraphs (a) and (c) of 
Sec. 520.506;

[[Page 135]]

    (3) The occupation must not be one for which a student-learner 
application was previously submitted by the employer and a special 
certificate was denied by the Administrator.

(The information collection requirements contained in paragraphs (a), 
(b), (c), (d), (e), (f), (g), (h) and (i) were approved by the Office of 
Management and Budget under control number 1215-0192.)



Sec. 520.503  What must I demonstrate in my application for a student-learner 
certificate to receive a favorable review?

    Each student-learner application must demonstrate that:
    (a) The training program under which the student-learner will be 
employed is a bona fide vocational training program as defined in 
subpart C of this part;
    (b) The employment of the student-learner at subminimum wages 
authorized by the special certificate must be necessary to prevent 
curtailment of opportunities for employment;
    (c) The student-learner is at least sixteen years of age, or at 
least eighteen years of age if employed in any occupation which the 
Secretary has declared to be particularly hazardous (see part 570, 
subpart E, of this chapter, but note the specific exemptions for 
student-learners in several of the orders);
    (d) The occupation for which the student-learner is receiving 
preparatory training requires a sufficient degree of skill to 
necessitate a substantial learning period;
    (e) The training is not for the purpose of acquiring manual 
dexterity and high production speed in repetitive operations;
    (f) The employment of a student-learner will not have the effect of 
displacing a worker employed in the establishment;
    (g) The employment of the student-learners at subminimum wages must 
not tend to impair or depress the wage rates or working standards 
established for experienced workers for work of a like or comparable 
character;
    (h) The occupational needs of the community or industry warrant the 
training of student-learners;
    (i) There are no serious outstanding violations of the provisions of 
a student-learner certificate previously issued to the employer, or 
serious violations of any other provisions of the FLSA by the employer 
which provide reasonable grounds to conclude that the terms of the 
certificate would not be complied with, if issued;
    (j) The issuance of such a certificate would not tend to prevent the 
development of apprenticeship programs in accordance with the 
regulations applicable thereto (subpart D of this part) or would not 
impair established apprenticeship standards in the occupation or 
industry involved; and
    (k) The number of student-learners to be employed in one 
establishment is not more than a small proportion of its work force.



Sec. 520.504  When will authority to pay student-learners subminimum 
wages become effective?

    (a) Certification by the appropriate school official on an 
application for a special student-learner certificate shall constitute a 
temporary authorization. This temporary authorization is effective from 
the date such application is forwarded to the Wage and Hour Division in 
conformance with Sec. 520.501.
    (b) At the end of 30 days, this application shall become the 
permanent special student-learner certificate unless, after review, the 
Administrator denies the application, issues a certificate with modified 
terms and conditions, or expressly extends the period of review.



Sec. 520.505  How will I be notified that my request to employ 
student-learners at subminimum wages has been denied and can I appeal 
the denial?

    (a) If, after review, an application is denied, notification of 
denial will be made to the appropriate school official, the employer and 
the student. This notification will occur within 30 days following the 
date such application was forwarded to the Wage and Hour Division, 
unless additional time for review is considered necessary or 
appropriate.
    (b) If additional time for review is considered necessary or 
appropriate, the proper school official, the employer, and the student 
shall be so notified. To the extent feasible, the Administrator may 
provide an opportunity to other interested persons to

[[Page 136]]

present data and views on the application before denying a special 
student-learner certificate.
    (c) Whenever a notification of denial is mailed to the employer, 
such denial shall be without prejudice to any subsequent application, 
except under the circumstances referred to in Sec. 520.502(i)(3).
    (d) Section 520.204 of this part describes the procedures for 
requesting reconsideration of a decision to grant or deny a certificate.



Sec. 520.506  What is the subminimum wage for student-learners and what 
must I do to comply with the terms of my student-learner certificate?

    (a) The special minimum wage rate paid to student-learners shall be 
not less than 75 percent of the applicable minimum under section 6(a) of 
the FLSA.
    (b) Compliance with items listed for favorable review of a student-
learner application (Sec. 540.503) must be demonstrated.
    (c)(1) The number of hours of employment training each week at 
subminimum wages pursuant to a certificate, when added to the hours of 
school instruction, shall not exceed 40 hours, except that authorization 
may be granted by the Administrator for a greater number of hours if 
found to be justified by extraordinary circumstances.
    (2) When school is not in session on any school day, the student-
learner may work a number of hours in addition to the weekly hours of 
employment training authorized by the certificate; provided,
    (i) The total hours worked shall not exceed 8 hours on any such day, 
and
    (ii) A notation shall be made in the employer's records to the 
effect that school not being in session was the reason additional hours 
were worked on such day.
    (3) During the school term, when school is not in session for the 
entire week, the student-learner may work at his/her employment training 
a number of hours in the week in addition to those authorized by the 
certificate; provided,
    (i) The total hours shall not exceed 40 hours in any such week, and
    (ii) A notation shall be made in the employer's records to the 
effect that school not being in session was the reason additional hours 
were worked in such week.
    (d) A special student-learner certificate shall not constitute 
authorization to pay a subminimum wage rate to a student-learner in any 
week in which he/she is employed for a number of hours in addition to 
the number authorized in the certificate, except as provided in 
paragraphs (c)(1), (2), and (3) of this section.



Sec. 520.507  How long does my certificate remain in effect?

    (a) A special student-learner certificate shall be effective for a 
period not to exceed the length of one school year unless a longer 
period is found to be justified by extraordinary circumstances. These 
circumstances must be explained in detail at the time of application. 
While each such request will be considered on its own merit, it is 
anticipated that such authorizations would be limited to occupations 
requiring an extended period of specialized training;
    (b) No certificate shall authorize employment training beyond the 
date of graduation.
    (c) No special student-learner certificate may be issued 
retroactively.



Sec. 520.508  What records, in addition to those required by Part 516 of 
this chapter and section 520.203 of this part, must I keep when 
student-learners are 
          employed?

    Any worker employed as a student-learner shall be identified as such 
on the payroll records, with each student-learner's occupation and rate 
of pay being shown. Notations should be made in the employer's records 
when additional hours are worked by reason of school not being in 
session.



PARTS 521-523 [RESERVED]--Table of Contents






PART 525--EMPLOYMENT OF WORKERS WITH DISABILITIES UNDER SPECIAL 
CERTIFICATES--Table of Contents




Sec.
525.1  Introduction.
525.2  Purpose and scope.
525.3  Definitions.
525.4  Patient workers.

[[Page 137]]

525.5  Wage payments.
525.6  Compensable time.
525.7  Application for certificates.
525.8  Special provisions for temporary authority.
525.9  Criteria for employment of workers with disabilities under 
          certificates at special minimum wage rates.
525.10  Prevailing wage rates.
525.11  Issuance of certificates.
525.12  Terms and conditions of special minimum wage certificates.
525.13  Renewal of special minimum wage certificates.
525.14  Posting of notices.
525.15  Industrial homework.
525.16  Records to be kept by employers.
525.17  Revocation of certificates.
525.18  Review.
525.19  Investigations and hearings.
525.20  Relation to other laws.
525.21  Lowering of wage rates.
525.22  Employee's right to petition.
525.23  Work activities centers.
525.24  Advisory Committee on Special Minimum Wages.

    Authority: 52 Stat. 1060, as amended (29 U.S.C. 201-219); Pub. L. 
99-486, 100 Stat. 1229 (29 U.S.C. 214).

    Source: 54 FR 32928, Aug. 10, 1989, unless otherwise noted.



Sec. 525.1  Introduction.

    The Fair Labor Standards Amendments of 1986 (Pub. L. 99-486, 100 
Stat. 1229) substantially revised those provisions of the Fair Labor 
Standards Act of 1938 (29 U.S.C. 201) (FLSA) permitting the employment 
of individuals disabled for the work to be performed (workers with 
disabilities) at special minimum wage rates below the rate that would 
otherwise be required by statute. These provisions are codified at 
section 14(c) of the FLSA and:
    (a) Provide for the employment under certificates of individuals 
with disabilities at special minimum wage rates which are commensurate 
with those paid to workers not disabled for the work to be performed 
employed in the vicinity for essentially the same type, quality, and 
quantity of work;
    (b) Require employers to provide written assurances that wage rates 
of individuals paid on an hourly rate basis be reviewed at least once 
every six months and that the wages of all employees be reviewed at 
least annually to reflect changes in the prevailing wages paid to 
experienced individuals not disabled for the work to be performed 
employed in the locality for essentially the same type of work;
    (c) Prohibit employers from reducing the wage rates prescribed by 
certificate in effect on June 1, 1986, for two years;
    (d) Permit the continuance or establishment of work activities 
centers; and
    (e) Provide that any employee receiving a special minimum wage rate 
pursuant to section 14(c), or the parent or guardian of such an 
employee, may petition for a review of that wage rate by an 
administrative law judge.



Sec. 525.2  Purpose and scope.

    The regulations in this part govern the issuance of all certificates 
authorizing the employment of workers with disabilities at special 
minimum wages pursuant to section 14(c) of FLSA.



Sec. 525.3  Definitions.

    (a) FLSA means the Fair Labor Standards Act of 1938, as amended.
    (b) Secretary means the Secretary of Labor or the Secretary of 
Labor's authorized representative.
    (c) Administrator means the Administrator of the Wage and Hour 
Division, U.S. Department of Labor, or the Administrator's authorized 
representative.
    (d) Worker with a disability for the purpose of this part means an 
individual whose earning or productive capacity is impaired by a 
physical or mental disability, including those relating to age or 
injury, for the work to be performed. Disabilities which may affect 
earning or productive capacity include blindness, mental illness, mental 
retardation, cerebral palsy, alcoholism, and drug addiction. The 
following, taken by themselves, are not considered disabilities for the 
purposes of this part: Vocational, social, cultural, or educational 
disabilities; chronic unemployment; receipt of welfare benefits; 
nonattendance at school; juvenile delinquency; and, correctional parole 
or probation. Further, a disability which may affect earning or 
productive capacity for one type of work may not affect such capacity 
for another.

[[Page 138]]

    (e) Patient worker means a worker with a disability, as defined 
above, employed by a hospital or institution providing residential care 
where such worker receives treatment or care without regard to whether 
such worker is a resident of the establishment.
    (f) Hospital or institution, hereafter referred to as institution, 
is a public or private, nonprofit or for-profit facility primarily 
engaged in (i.e., more than 50 percent of the income is attributable to) 
providing residential care for the sick, the aged, or the mentally ill 
or retarded, including but not limited to nursing homes, intermediate 
care facilities, rest homes, convalescent homes, homes for the elderly 
and infirm, halfway houses, residential centers for drug addicts or 
alcoholics, and the like, whether licensed or not licensed.
    (g) Employ is defined in FLSA as to suffer or permit to work. An 
employment relationship arises whenever an individual, including an 
individual with a disability, is suffered or permitted to work. The 
determination of an employment relationship does not depend upon the 
level of performance or whether the work is of some therapeutic benefit. 
However, an individual does not become an employee if engaged in such 
activities as making craft products where the individual voluntarily 
participates in such activities and the products become the property of 
the individual making them, or all of the funds resulting from the sale 
of the products are divided among the participants in the activity or 
are used in purchasing additional materials to make craft products.
    (h) Special minimum wage is a wage authorized under a certificate 
issued to an employer under this part that is less than the statutory 
minimum wage.
    (i) Commensurate wage is a special minimum wage paid to a worker 
with a disability which is based on the worker's individual productivity 
in proportion to the wage and productivity of experienced nondisabled 
workers performing essentially the same type, quality, and quantity of 
work in the vicinity in which the individual under certificate is 
employed. For example, the commensurate wage of a worker with a 
disability who is 75% as productive as the average experienced 
nondisabled worker, taking into consideration the type, quality, and 
quantity of work of the disabled worker, would be set at 75% of the wage 
paid to the nondisabled worker. For purposes of these regulations, a 
commensurate wage is always a special minimum wage, i.e., a wage below 
the statutory minimum.
    (j) Vicinity or locality means the geographic area from which the 
labor force of the community is drawn.
    (k) Experienced worker means a worker who has learned the basic 
elements or requirements of the work to be performed, ordinarily by 
completion of a probationary or training period. Typically, such a 
worker will have received at least one pay raise after successful 
completion of the probationary or training period.



Sec. 525.4  Patient workers.

    With respect to patient workers, as defined in Sec. 525.3(e), a 
major factor in determining if an employment relationship exists is 
whether the work performed is of any consequential economic benefit to 
the institution. Generally, work shall be considered to be of 
consequential economic benefit if it is of the type that workers without 
disabilities normally perform, in whole or in part in the institution or 
elsewhere. However, a patient does not become an employee if he or she 
merely performs personal housekeeping chores, such as maintaining his or 
her own quarters, or receives a token remuneration in connection with 
such services. It may also be possible for patients in family-like 
settings such as group homes to rotate or share household tasks or 
chores without becoming employees.



Sec. 525.5  Wage payments.

    (a) An individual whose earning or productive capacity is not 
impaired for the work being performed cannot be employed under a 
certificate issued pursuant to this part and must be paid at least the 
applicable minimum wage. An individual whose earning or productive 
capacity is impaired to the extent that the individual is unable to earn 
at least the applicable minimum wage may be paid a commensurate wage, 
but only after the employer has obtained a

[[Page 139]]

certificate authorizing payment of special minimum wages from the 
appropriate office of the Wage and Hour Division of the Department of 
Labor.
    (b) With respect to patient workers employed in institutions, no 
deductions can be made from such individuals' commensurate wages to 
cover the cost of room, board, or other services provided by the 
facility. Such an individual must receive his or her wages free and 
clear, except for amounts deducted for taxes assessed against the 
employee and any voluntary wage assignments directed by the employee. 
(See part 531 of this title.) However, it is not the intention of these 
regulations to preclude the institution thereafter from assessing or 
collecting charges for room, board, and other services actually provided 
to an individual to the extent permitted by applicable Federal or State 
law and on the same basis as it assesses and collects from nonworking 
patients.



Sec. 525.6  Compensable time.

    Individuals employed subject to this part must be compensated for 
all hours worked. Compensable time includes not only those hours during 
which the individual is actually performing productive work but also 
includes those hours when no work is performed but the individual is 
required by the employer to remain available for the next assignment. 
However, where the individual is completely relieved from duty and is 
not required to remain available for the next assignment, such time will 
not be considered compensable time. For example, an individual employed 
by a rehabilitation facility would not be engaged in a compensable 
activity where such individual is completely relieved from duty but is 
provided therapy or the opportunity to participate in an alternative 
program or activity in the facility not involving work and not directly 
related to the worker's job (e.g., self-help skills training, 
recreation, job seeking skills training, independent living skills, or 
adult basic education). The burden of establishing that such hours are 
not compensable rests with the facility and such hours must be clearly 
distinguishable from compensable hours. (For further information on 
compensable time in general under FLSA, see part 785 of this title.)



Sec. 525.7  Application for certificates.

    (a) Application for a certificate may be filed by any employer with 
the Regional Office of the Wage and Hour Division having administrative 
jurisdiction over the geographic area in which the employment is to take 
place.
    (b) The employer shall provide answers to all of the applicable 
questions contained on the application form provided by the Regional 
Office.
    (c) The application shall be signed by the employer or the 
employer's authorized representative.



Sec. 525.8  Special provisions for temporary authority.

    (a) Temporary authority may be granted to an employer permitting the 
employment of workers with disabilities pursuant to a vocational 
rehabilitation program of the Veterans Administration for veterans with 
a service-incurred disability or a vocational rehabilitation program 
administered by a State agency.
    (b) Temporary authority is effective for 90 days from the date the 
appropriate section of the application form is signed and completed by 
the duly designated representative of the State agency or the Veterans 
Administration. Such authority may not be renewed or extended by the 
issuing agency.
    (c) The signed application constitutes the temporary authority to 
employ workers with disabilities at special minimum wage rates. A copy 
of the application must be forwarded within 10 days to the appropriate 
Regional Office of the Wage and Hour Division. Upon receipt, the 
application will be reviewed and, where appropriate, a certificate will 
be issued by the Regional Office. Where additional information is 
required or certification is denied, the applicant will receive 
notification from the Regional Office.



Sec. 525.9  Criteria for employment of workers with disabilities under 
certificates at special minimum wage rates.

    (a) In order to determine that special minimum wage rates are 
necessary in

[[Page 140]]

order to prevent the curtailment of opportunities for employment, the 
following criteria will be considered:
    (1) The nature and extent of the disabilities of the individuals 
employed as these disabilities relate to the individuals' productivity;
    (2) The prevailing wages of experienced employees not disabled for 
the job who are employed in the vicinity in industry engaged in work 
comparable to that performed at the special minimum wage rate;
    (3) The productivity of the workers with disabilities compared to 
the norm established for nondisabled workers through the use of a 
verifiable work measurement method (see Sec. 525.12(h)) or the 
productivity of experienced nondisabled workers employed in the vicinity 
on comparable work; and,
    (4) The wage rates to be paid to the workers with disabilities for 
work comparable to that performed by experienced nondisabled workers.
    (b) In order to be granted a certificate authorizing the employment 
of workers with disabilities at special minimum wage rates, the employer 
must provide the following written assurances concerning such 
employment:
    (1) In the case of individuals paid hourly rates, the special 
minimum wage rates will be reviewed by the employer at periodic 
intervals at a minimum of once every six months; and,
    (2) Wages for all employees will be adjusted by the employer at 
periodic intervals at a minimum of once each year to reflect changes in 
the prevailing wages paid to experienced nondisabled individuals 
employed in the locality for essentially the same type of work.



Sec. 525.10  Prevailing wage rates.

    (a) A prevailing wage rate is a wage rate that is paid to an 
experienced worker not disabled for the work to be performed. The 
Department recognizes that there may be more than one wage rate for a 
specific type of work in a given area. An employer must be able to 
demonstrate that the rate being used as prevailing for determining a 
commensurate wage was objectively determined according to the guidelines 
contained in this section.
    (b) An employer whose work force primarily consists of nondisabled 
workers or who employs more than a token number of nondisabled workers 
doing similar work may use as the prevailing wage the wage rate paid to 
that employer's experienced nondisabled employees performing similar 
work. Where an agency places a worker or workers with disabilities on 
the premises of an employer described above, the wage paid to the 
employer's experienced workers may be used as prevailing.
    (c) An employer whose work force primarily consists of workers 
disabled for the work to be performed may determine the prevailing wage 
by ascertaining the wage rates paid to the experienced nondisabled 
workers of other employers in the vicinity. Such data may be obtained by 
surveying comparable firms in the area that employ primarily nondisabled 
workers doing similar work. The firms surveyed must be representative of 
comparable firms in terms of wages paid to experienced workers doing 
similar work. The appropriate size of such a sample will depend on the 
number of firms doing similar work but should include no less than three 
firms unless there are fewer firms doing such work in the area. A 
comparable firm is one which is of similar size in terms of employees or 
which competes for or bids on contracts of a similar size or nature. 
Employers may contact other sources such as the Bureau of Labor 
Statistics or private or State employment services where surveys are not 
practical. If similar work cannot be found in the area defined by the 
geographic labor market, the closest comparable community may be used.
    (d) The prevailing wage rate must be based upon the wage rate paid 
to experienced nondisabled workers as defined elsewhere in these 
regulations. Employment services which only provide entry level wage 
data are not acceptable as sources for prevailing wage information as 
required in these regulations.
    (e) There is no prescribed method for tabulating the results of a 
prevailing wage survey. For example, either a weighted or unweighted 
average would

[[Page 141]]

be acceptable provided the employer is consistent in the methodology 
used.
    (f) The prevailing wage must be based upon work utilizing similar 
methods and equipment. Where the employer is unable to obtain the 
prevailing wage for a specific job to be performed on the premises, such 
as collating documents, it would be acceptable to use as the prevailing 
wage the wage paid to experienced individuals employed in similar jobs 
such as file clerk or general office clerk, requiring the same general 
skill levels.
    (g) The following information should be recorded in documenting the 
determination of prevailing wage rates:
    (1) Date of contact with firm or other source;
    (2) Name, address, and phone number of firm or other source 
contacted;
    (3) Individual contacted within firm or source;
    (4) Title of individual contacted;
    (5) Wage rate information provided;
    (6) Brief description of work for which wage information is 
provided;
    (7) Basis for the conclusion that wage rate is not based upon an 
entry level position. (See also Sec. 525.10(c).)
    (h) A prevailing wage may not be less than the minimum wage 
specified in section 6(a) of FLSA.



Sec. 525.11  Issuance of certificates.

    (a) Upon consideration of the criteria cited in these regulations, a 
special certificate may be issued.
    (b) If a special minimum wage certificate is issued, a copy shall be 
sent to the employer. If denied, the employer will be notified in 
writing and told the reasons for the denial, as well as the right to 
petition under Sec. 525.18.



Sec. 525.12  Terms and conditions of special minimum wage certificates.

    (a) A special minimum wage certificate shall specify the terms and 
conditions under which it is granted.
    (b) A special minimum wage certificate shall apply to all workers 
employed by the employer to which the special certificate is granted 
provided such workers are in fact disabled for the work they are to 
perform.
    (c) A special minimum wage certificate shall be effective for a 
period to be designated by the Administrator. Workers with disabilities 
may be paid wages lower than the statutory minimum wage rate set forth 
in section 6 of FLSA only during the effective period of the 
certificate.
    (d) Workers paid under special minimum wage certificates shall be 
paid wages commensurate with those paid experienced nondisabled workers 
employed in the vicinity in which they are employed for essentially the 
same type, quality, and quantity of work.
    (e) Workers with disabilities shall be paid not less than one and 
one-half times their regular rates of pay for all hours worked in excess 
of the maximum workweek applicable under section 7 of FLSA.
    (f) The wages of all workers paid a special minimum wage under this 
part shall be adjusted by the employer at periodic intervals at a 
minimum of once a year to reflect changes in the prevailing wages paid 
to experienced individuals not disabled for the work to be performed 
employed in the vicinity for essentially the same type of work.
    (g) Each worker with a disability and, where appropriate, a parent 
or guardian of the worker, shall be informed, orally and in writing, of 
the terms of the certificate under which such worker is employed. This 
requirement may be satisfied by making copies of the certificate 
available. Where a worker with disabilities displays an understanding of 
the terms of a certificate and requests that other parties not be 
informed, it is not necessary to inform a parent or guardian.
    (h) In establishing piece rates for workers with disabilities, the 
following criteria shall be used:
    (1) Industrial work measurement methods such as stop watch time 
studies, predetermined time systems, standard data, or other measurement 
methods (hereinafter referred to as ``work measurement methods'') shall 
be used by the employer to establish standard production rates of 
workers not disabled for the work to be performed. The Department will 
accept the use of whatever method an employer chooses to use. However, 
the employer has the responsibility of demonstrating that a particular 
method is generally accepted by industrial

[[Page 142]]

engineers and has been properly executed. No specific training or 
certification will be required. Where work measurement methods have 
already been applied by another employer or source, and documentation 
exists to show that the methods used are the same, it is not necessary 
to repeat these methods to establish production standards.
    (i) The piece rates shall be based on the standard production rates 
(number of units an experienced worker not disabled for the work is 
expected to produce per hour) and the prevailing industry wage rate paid 
experienced nondisabled workers in the vicinity for essentially the same 
type and quality of work or for work requiring similar skill. 
(Prevailing industry wage rate divided by the standard number of units 
per hour equals the piece rate.).
    (ii) Piece rates shall not be less than the prevailing piece rates 
paid experienced workers not disabled for the work doing the same or 
similar work in the vicinity when such piece rates exist and can be 
compared with the actual employment situations of the workers with 
disabilities.
    (2) Any work measurement method used to establish piece rates shall 
be verifiable through the use of established industrial work measurement 
techniques.
    (i) If stop watch time studies are made, they shall be made with a 
person or persons whose productivity represents normal or near normal 
performance. If their productivity does not represent normal or near 
normal performance, adjustments of performance shall be made. Such 
adjustments, sometimes called ``performance rating'' or ``leveling'' 
shall be made only by a person knowledgeable in this technique, as 
evidenced by successful completion of training in this area. The persons 
observed should be given time to practice the work to be performed in 
order to provide them with an opportunity to overcome the initial 
learning curve. The persons observed shall be trained to use the 
specific work method and tools which are available to workers with 
disabilities employed under special minimum wage certificates.
    (ii) Appropriate time shall be allowed for personal time, fatigue, 
and unavoidable delays. Generally, not less than 15% allowances (9-10 
minutes per hour) shall be used in conducting time studies.
    (iii) Work measurements shall be conducted using the same work 
method that will be utilized by the workers with disabilities. When 
modifications such as jigs or fixtures are made to production methods to 
accommodate special needs of individual workers with disabilities, 
additional work measurements need not be conducted where the 
modifications enable the workers with disabilities to perform the work 
or increase productivity but would impede a worker without disabilities. 
Where workers with disabilities do not have a method available to them, 
as for example where an adequate number of machines are not available, a 
second work measurement should be conducted.
    (i) Each worker with a disability employed on a piece rate basis 
should be paid full earnings. Employers may ``pool'' earnings only where 
piece rates cannot be established for each individual worker. An example 
of this situation is a team production operation where each worker's 
individual contribution to the finished product cannot be determined 
separately. However, in such situations, the employer should make every 
effort to objectively divide the earnings according to the productivity 
level of each individual worker.
    (j) The following terms shall be met for workers with disabilities 
employed at hourly rates:
    (1) Hourly rates shall be based upon the prevailing hourly wage 
rates paid to experienced workers not disabled for the job doing 
essentially the same type of work and using similar methods or equipment 
in the vicinity. (See also Sec. 525.10.)
    (2) An initial evaluation of a worker's productivity shall be made 
within the first month after employment begins in order to determine the 
worker's commensurate wage rate. The results of the evaluation shall be 
recorded and the worker's wages shall be adjusted accordingly no later 
than the first complete pay period following the initial evaluation. 
Each worker is entitled

[[Page 143]]

to commensurate wages for all hours worked. Where the wages paid to the 
worker during pay periods prior to the initial evaluation were less than 
the commensurate wage indicated by the evaluation, the employer must 
compensate the worker for any such difference unless it can be 
demonstrated that the initial payments reflected the commensurate wage 
due at that time.
    (3) Upon completion of not more than six months of employment, a 
review shall be made with respect to the quantity and quality of work of 
each hourly-rated worker with a disability as compared to that of 
nondisabled workers engaged in similar work or work requiring similar 
skills and the findings shall be recorded. The worker's productivity 
shall then be reviewed and the findings recorded at least every 6 months 
thereafter. A review and recording of productivity shall also be made 
after a worker changes jobs and at least every 6 months thereafter. The 
worker's wages shall be adjusted accordingly no later than the first 
complete pay period following each review. Conducting reviews at six-
month intervals should be viewed as a minimum requirement since workers 
with disabilities are entitled to commensurate wages for all hours 
worked. Reviews must be conducted in a manner and frequency to insure 
payment of commensurate wages. For example, evaluations should not be 
conducted before a worker has had an opportunity to become familiar with 
the job or at a time when the worker is fatigued or subject to 
conditions that result in less than normal productivity.
    (4) Each review should contain, as a minimum and in addition to the 
data cited above, the following: name of the individual being reviewed; 
date and time of the review; and, name and position of the individual 
doing the review.



Sec. 525.13  Renewal of special minimum wage certificates.

    (a) Applications may be filed for renewal of special minimum wage 
certificates.
    (b) If an application for renewal has been properly and timely 
filed, an existing special minimum wage certificate shall remain in 
effect until the application for renewal has been granted or denied.
    (c) Workers with disabilities may not continue to be paid special 
minimum wages after notice that an application for renewal has been 
denied.
    (d) Except in cases of willfulness or those in which the public 
interest requires otherwise, before an application for renewal is denied 
facts or conduct which may warrant such action shall be called to the 
attention of the employer in writing and such employer shall be afforded 
an opportunity to demonstrate or achieve compliance with all legal 
requirements.



Sec. 525.14  Posting of notices.

    Every employer having workers who are employed under special minimum 
wage certificates shall at all times display and make available to 
employees a poster as prescribed and supplied by the Administrator. The 
Administrator will make available, upon request, posters in other 
formats such as Braille or recorded tapes. Such a poster will explain, 
in general terms, the conditions under which special minimum wages may 
be paid and shall be posted in a conspicuous place on the employer's 
premises where it may be readily observed by the workers with 
disabilities, the parents and guardians of such workers, and other 
workers. Where an employer finds it inappropriate to post such a notice, 
this requirement may be satisified by providing the poster directly to 
all employees subject to its terms.



Sec. 525.15  Industrial homework.

    (a) Where the employer is an organization or institution carrying 
out a recognized program of rehabilitation for workers with disabilities 
and holds a special certificate issued pursuant to this part, 
certification under regulations governing the employment of industrial 
homeworkers (29 CFR part 530) is not required.
    (b) For all other types of employers, special rules apply to the 
employment of homeworkers in the following industries: Jewelry 
manufacturing, knitted outerwear, gloves and mittens, buttons and 
buckles, handkerchief manufacturing, embroideries, and women's apparel. 
(See 29 CFR part 530.)

[[Page 144]]



Sec. 525.16  Records to be kept by employers.

    Every employer, or where appropriate (in the case of records 
verifying the workers' disabilities) the referring agency or facility, 
of workers employed under special minimum wage certificates shall 
maintain and have available for inspection records indicating:
    (a) Verification of the workers' disabilities;
    (b) Evidence of the productivity of each worker with a disability 
gathered on a continuing basis or at periodic intervals (not to exceed 
six months in the case of employees paid hourly wage rates);
    (c) The prevailing wages paid workers not disabled for the job 
performed who are employed in industry in the vicinity for essentially 
the same type of work using similar methods and equipment as that used 
by each worker with disabilities employed under a special minimum wage 
certificate (see also Sec. 525.10(b) and (d));
    (d) The production standards and supporting documentation for 
nondisabled workers for each job being performed by workers with 
disabilities employed under special certificates; and
    (e) The records required under all of the applicable provisions of 
part 516 of this title, except that any provision pertaining to 
homeworker handbooks shall not be applicable to workers with 
disabilities who are employed by a recognized nonprofit rehabilitation 
facility and working in or about a home, apartment, tenement, or room in 
a residential establishment. (See Sec. 525.15) Records required by this 
section shall be maintained and preserved for the periods specified in 
part 516 of this title.

(Approved by the Office of Management and Budget under control number 
1215-0017)



Sec. 525.17  Revocation of certificates.

    (a) A special minimum wage certificate may be revoked for cause at 
any time. A certificate may be revoked:
    (1) As of the date of issuance, if it is found that 
misrepresentations or false statements have been made in obtaining the 
certificate or in permitting a worker with a disability to be employed 
thereunder;
    (2) As of the date of violation, if it is found that any of the 
provisions of FLSA or of the terms of the certificate have been 
violated; or
    (3) As of the date of notice of revocation, if it is found that the 
certificate is no longer necessary in order to prevent curtailment of 
opportunities for employment, or that the requirements of these 
regulations other than those referred to in paragraph (a)(2) of this 
section have not been complied with.
    (b) Except in cases of willfulness or those in which the public 
interest requires otherwise, before any certificate shall be revoked, 
facts or conduct which may warrant such action shall be called to the 
attention of the employer in writing and such employer shall be afforded 
an opportunity to demonstrate or achieve compliance with all legal 
requirements.



Sec. 525.18  Review.

    Any person aggrieved by any action of the Administrator taken 
pursuant to this part may, within 60 days or such additional time as the 
Administrator may allow, file with the Administrator a petition for 
review. Such review, if granted, shall be made by the Administrator. 
Other interested persons, to the extent it is deemed appropriate, may be 
afforded an opportunity to present data and views.



Sec. 525.19  Investigations and hearings.

    The Administrator may conduct an investigation, which may include a 
hearing, prior to taking any action pursuant to these regulations. To 
the extent it is deemed appropriate, the Administrator may provide an 
opportunity to other interested persons to present data and views. 
Proceedings initiated pursuant to this section are separate from those 
taken pursuant to FLSA section 14(c)(5) and Sec. 525.22.



Sec. 525.20  Relation to other laws.

    No provision of these regulations, or of any special minimum wage 
certificate issued thereunder, shall excuse noncompliance with any other 
Federal or State law or municipal ordinance establishing higher 
standards.

[[Page 145]]



Sec. 525.21  Lowering of wage rates.

    (a) No employer may reduce the minimum hourly wage rate, guaranteed 
by a special minimum wage certificate in effect on June 1, 1986, of any 
worker with disabilities from June 1, 1986 until May 31, 1988, without 
prior authorization of the Secretary.
    (b) This provision applies to those workers with disabilities who 
were:
    (1) Employed during the pay period which included June 1, 1986, even 
if no work was performed during that pay period; and
    (2) Employed under a group or individual special minimum wage 
certificate which specified a minimum guaranteed rate, i.e., a special 
certificate issued under former section 14(c) (1) or (2)(b) of FLSA.
    (c) In order to obtain authority to lower the wage rate of a worker 
with a disability to whom this provision applies to a rate below the 
certificate rate, the employer must submit information as prescribed 
under this section to the appropriate Regional Office. The burden of 
establishing the necessity of lowering the wage of a worker with a 
disability rests with the employer.
    (d) In reviewing a request to lower a wage rate of a worker with a 
disability, documented evidence of the following will be considered:
    (1) Any change in the worker's disabling condition which has a 
substantially negative impact on productive capacity;
    (2) Any change in the type of work being performed in the facility 
which would affect the productivity of the worker with a disability or 
which would result in the application of a lower prevailing wage rate;
    (3) Any change in general economic conditions in the locality in 
which the work is performed which results in lower prevailing wage 
rates.
    (e) A wage rate may not be lowered until authorization is obtained.



Sec. 525.22  Employee's right to petition.

    (a) Any employee receiving a special minimum wage at a rate 
specified pursuant to subsection 14(c) of FLSA or the parent or guardian 
of such an employee may petition the Secretary to obtain a review of 
such special minimum wage rate. No particular form of petition is 
required, except that a petition must be signed by the individual, or 
the parent or guaradian of the individual, and should contain the name 
and address of the employee and the name and address of the employee's 
employer. A petition may be filed in person or by mail with the 
Administrator of the Wage and Hour Division, Employment Standards 
Administration, U.S. Department of Labor, Room S3502, 200 Constitution 
Avenue NW., Washington, DC 20210. The petitioner may be represented by 
counsel in any stage of such proceedings. Upon receipt, the petition 
shall be forwarded immediately to the Chief Administrative Law Judge.
    (b) Upon receipt of a petition, the Chief Administrative Law Judge 
shall, within 10 days of the receipt of the petition by the Secretary, 
appoint an Administrative Law Judge (ALJ) to hear the case. Upon 
receipt, the ALJ shall notify the employer named in the petition. The 
ALJ shall also notify the employee, the employer, the Administrator, and 
the Associate Solicitor for Fair Labor Standards of the time and place 
of the hearing. The date of the hearing shall be not more than 30 days 
after the assignment of the case to the ALJ. All the parties shall be 
given at least eight days' notice of such hearing. Because of the time 
constraints imposed by the statute, requests for postponement shall be 
granted only sparingly and for compelling reasons.
    (c) Hearings held under this subpart shall be conducted, consistent 
with statutory time limitations, under the Department's rules of 
practice and procedure for administrative hearings found in 29 CFR part 
18. There shall be a minimum of formality in the proceeding consistent 
with orderly procedure. Any employer who intends to participate in the 
proceeding shall provide to the ALJ, and shall serve on the petitioner 
and the Associate Solicitor for Fair Labor Standards no later than 15 
days prior to the commencement of the hearing, or as soon as practical 
depending on when the notice of a hearing as required under paragraph 
(b) of this section was received, that documentary evidence pertaining 
to the employee or employees identified in the petition which is 
contained in the

[[Page 146]]

records required by Sec. 525.16 (a), (b), (c) and (d). The Administrator 
shall be permitted to participate by counsel in the proceeding upon 
application.
    (d) In determining whether any special minimum wage rate is 
justified, the ALJ shall consider, to the extent evidence is available, 
the productivity of the employee or employees identified in the petition 
and the conditions under which such productivity was measured, and the 
productivity of other employees performing work of essentially the same 
type and quality for other employers in the same vicinity and the 
conditions under which much productivity was mesured. In these 
proceedings, the burden of proof on all matters relating to the 
propriety of a wage at issue shall rest with the employer.
    (e) The ALJ shall issue a decision within 30 days after the 
termination of the hearing and shall serve the decision on the 
Administrator and all interested parties by Express Mail or other 
similar system guaranteeing one-day delivery. The decision shall contain 
appropriate findings and conclusions and an order. If the ALJ finds that 
the special minimum wage being paid or which has been paid is not 
justified, the order shall specify the lawful rate and the period of 
employment to which the rate is applicable. In the absence of evidence 
sufficient to support the conclusion that the proper wage should be less 
than the minimum wage, the ALJ shall order that the minimum wage be 
paid.
    (f) Within 15 days after the date of the decision of the ALJ, the 
petitioner, the Administrator, or the employer who seeks review thereof 
may request review by the Secretary. No particular form of request is 
required, except that a request must be in writing and must attach a 
copy of the ALJ's decision. Requests for review shall be filed with the 
Secretary of Labor, 200 Constitution Ave. NW., Washington, DC 20210. Any 
other interested party may file a reply thereto with the Secretary and 
the Administrator within 5 working days of receipt of such request for 
review. The request for review and reply thereto shall be transmitted by 
the Administrator to all interested parties by Express Mail or other 
similar system guaranteeing one-day delivery.
    (g) The decision of the ALJ shall be deemed to be final agency 
action 30 days after issuance thereof, unless within 30 days of the date 
of the decision the Secretary grants a request to review the decision. 
Where such request for review is granted, within 30 days after receipt 
of such request the Secretary shall review the record and shall either 
adopt the decision of the ALJ or issue exceptions. The decision of the 
ALJ, together with any exceptions issued by the Secretary, shall be 
deemed to be a final agency action.
    (h) Within 30 days of issuance of the final action of the Secretary 
reviewing the decision of the ALJ or declining to grant such review, any 
person adversely affected or aggrieved by such action may seek judicial 
review pursuant to chapter 7 of title 5, United States Code. The record 
of the case, including the record of proceedings before the ALJ, shall 
be transmitted by the Secretary to the appropriate court pursuant to the 
rules of such court.



Sec. 525.23  Work activities centers.

    Nothing in these regulations shall be interpreted to prevent an 
employer from maintaining or establishing work activities centers to 
provide therapeutic activities for workers with disabilities as long as 
the employer complies with the requirement of these regulations. Work 
activities centers shall include centers planned and designed to provide 
therapeutic activities for workers with severe disabilities affecting 
their productive capacity. Any establishment whose workers with 
disabilities are employed at special minimum wages must comply with the 
requirements of this part, regardless of the designation of such 
establishment.



Sec. 525.24  Advisory Committee on Special Minimum Wages.

    The Advisory Committee on Special Minimum Wages, the members of 
which are appointed by the Secretary, shall advise and make 
recommendations to the Administrator concerning the administration and 
enforcement of these regulations and the need for amendments thereof and 
shall serve

[[Page 147]]

such other functions as may be desired by the Administrator.



PART 527 [RESERVED]--Table of Contents







   PART 528--ANNULMENT OR WITHDRAWAL OF CERTIFICATES FOR THE EMPLOYMENT OF 
   STUDENT-LEARNERS, APPRENTICES, LEARNERS, MESSENGERS, HANDICAPPED PERSONS, 
   STUDENT-
WORKERS, AND FULL-TIME STUDENTS IN AGRICULTURE OR IN RETAIL OR SERVICE 
ESTABLISHMENTS AT SPECIAL MINIMUM WAGE RATES--Table of Contents




Sec.
528.1  Applicability of the regulations in this part.
528.2  Definition of terms.
528.3  Withdrawal and annulment of certificates.
528.4  According opportunity to demonstrate or achieve compliance.
528.5  Proceedings for withdrawal or annulment.
528.6  Review.
528.7  Effect of order of annulment or withdrawal.

    Authority: Sec. 14, 52 Stat. 1068, as amended; 29 U.S.C. 214, unless 
otherwise noted.



Sec. 528.1  Applicability of the regulations in this part.

    The regulations in this part shall govern the annulment or 
withdrawal of any certificate except a temporary certificate issued 
pending final action on an application, issued pursuant to parts 519, 
520, 521, 522, 523, 524, and 527 of this chapter, and having effect 
under section 14 of the Fair Labor Standards Act of 1938.

[27 FR 3994, Apr. 26, 1962]



Sec. 528.2  Definition of terms.

    As used in the regulations contained in this part, the term:
    (a) Withdrawal shall mean termination of validity of a certificate 
with prospective effect from the time of the action of withdrawal.
    (b) Annulment shall mean withdrawal of a certificate with 
retroactive effect to the date of issuance.
    (c) Authorized representative shall mean: (1) The Assistant Regional 
Administrators for the Wage and Hour Division (who are authorized to 
redelegate this authority) within their respective regions, and (2) the 
Caribbean Director of the Wage and Hour Division for the area covered by 
the Caribbean office.
    (d) Area director shall include any area director of the Wage and 
Hour Division.

(Secretary's Order No. 16-75, dated Nov. 25, 1975 (40 FR 55913). 
Employment Standards Order No. 76-2, dated Feb. 23, 1976 (41 FR 9016))

[43 FR 28469, June 30, 1978]



Sec. 528.3  Withdrawal and annulment of certificates.

    (a) An authorized representative may withdraw a certificate from any 
employer within that representative's region who, acting under color of 
any certificate or application for the employment of learners, 
handicapped workers, student workers, student learners, apprentices, 
messengers, or full-time students in agriculture, retail, or service 
establishments, or in institutions of higher education at subminimum 
wages under section 14 of the act, fails to comply with the limitations 
in such certificate or otherwise violates the act.
    (b) An authorized representative may annul a certificate affected by 
mistake in its issuance if the employer knowingly induced or knowingly 
took advantage of the mistake. Where the employer did not knowingly 
induce the mistake but knowingly took advantage of it, a new certificate 
shall be issued by the authorized representative if, and on such terms 
as, such certificate would have been issued had there been no mistake 
limited in its term from the date of issuance to the date of annulment 
of the annulled certificate.
    (c) A certificate may be withdrawn in the public interest by a 
representative authorized to issue such type of certificate whenever any 
part of the exemption it provides is no longer necessary to prevent 
curtailment of opportunities for employment. If appropriate, a more 
limited replacement certificate may be

[[Page 148]]

issued by the authorized representative.

(Secretary's Order No. 16-75, dated Nov. 25, 1975 (40 FR 55913); 
Employment Standards Order No. 76-2, dated Feb. 23, 1976 (41 FR 9016))

[43 FR 28469, June 30, 1978]



Sec. 528.4  According opportunity to demonstrate or achieve compliance.

    Prior to instituting proceedings for withdrawal of a certificate 
under paragraph (a) of Sec. 528.3, except in cases of willfullness, an 
area director shall mail a letter to the employer setting forth alleged 
facts or conduct which may warrant withdrawal of the certificate, and 
fixing a time and a place for a conference at which the employer shall 
be accorded an opportunity to show that no cause for withdrawal under 
Sec. 528.3(a) exists or that compliance has been achieved by paying 
wages improperly withheld and by taking steps adequate to insure that 
new cause for annulment or withdrawal will not occur. By written report 
to the appropriate authorized representative, a copy of which shall be 
mailed to the employer, the area director shall concisely summarize the 
conference and shall include conclusions as to whether the employer 
demonstrated or achieved compliance. If the authorized representative is 
satisfied that the employer either demonstrated or achieved such 
compliance, no proceedings shall be instituted under Sec. 528.3(a) for 
the withdrawal of the certificate.

(Secretary's Order No. 16-75, dated Nov. 25, 1975 (40 FR 55913), 
Employment Standards Order 76-2, dated Feb. 23, 1976 (41 FR 9016))

[43 FR 28469, June 30, 1978]



Sec. 528.5  Proceedings for withdrawal or annulment.

    The representative authorized to withdraw or annul a certificate 
under Sec. 528.3 shall institute proceedings by a letter mailed to the 
employer and, where appropriate, to the apprenticeship agency (in the 
case of apprentice certificates) or the responsible school official (in 
the case of student-learner certificates), setting forth alleged facts 
which may warrant such annulment or withdrawal and advising the employer 
that such an annulment or withdrawal of the scope provided in Sec. 528.7 
will take effect at a time specified unless facts are presented which 
convince the authorized representative that such action should not be 
taken. The letter shall advise such person, agency, or official of the 
right to respond by mail or to appear by or with counsel or by other 
duly qualified representative at a specified time and place. If there is 
no timely objection to the withdrawal or annulment thus proposed, it 
shall be deemed effective according to the terms of the letter 
instituting the annulment or withdrawal proceeding without the necessity 
of any further action. If objection to the annulment or withdrawal as 
proposed is made within the specified time the further proceedings shall 
be as informal as practicable commensurate with orderly dispatch and 
fairness. Department of Labor investigation files or reports or portions 
thereof may be considered in such proceedings to the extent they are 
made available for examination during the proceedings. If objection to 
the proposed annulment or withdrawal is made by such specified time, the 
authorized representative shall, after considering all pertinent matters 
presented, mail a letter to the employer and, where appropriate, to the 
apprenticeship agency or the responsible school official, setting out 
that representative's findings of specific pertinent facts and 
conclusions and that representative's order concerning the proposed 
annulment or withdrawal. In proceedings instituted for annulment, the 
order may provide for withdrawal instead of annulment if the proof 
warrants such withdrawal but fails to support adequately the annulment. 
Such an order shall be deemed issued and effective according to its 
terms when mailed.

(Secretary's Order No. 16-75, dated Nov. 25, 1975 (40 FR 55913); 
Employment Standards Order No. 76-2, dated Feb. 23, 1976 (41 FR 9016))

[43 FR 28469, June 30, 1978]



Sec. 528.6  Review.

    Any employer and, when appropriate, any apprenticeship agency or 
responsible school official, who expressed timely objection to the 
proposed action

[[Page 149]]

prior to issuance of an order of annulment or withdrawal may obtain 
review, limited to the question of whether the findings of fact support 
the order under the regulations in this part. Application for such 
review shall be in writing addressed to the Administrator and mailed 
within 15 days after the order is issued. The Administrator may affirm, 
modify, or reverse the order, or may remand it for further proceedings. 
The order under review shall not be stayed in effect pending such 
review. Any aggrieved person may obtain such review of an order entered 
in proceedings instituted under paragraph (c) of Sec. 528.3.

[21 FR 5316, July 17, 1956, as amended at 22 FR 5683, July 18, 1957]



Sec. 528.7  Effect of order of annulment or withdrawal.

    Except as otherwise expressly provided in such order, any order of 
annulment or withdrawal under paragraph (a) or (b) of Sec. 528.3 shall 
be effective to terminate all certifications to which the regulations in 
this part apply in effect at the establishment where the cause for 
withdrawal arose or where the annulled certificate had effect. After 
such annulment or withdrawal, such employer shall be ineligible to 
obtain or exercise the privileges granted in such a certificate until he 
satisfies the issuing officer that he will not again give cause for 
annulment or withdrawal if a certificate is issued.

(Secretary's Order No. 16-75, dated Nov. 25, 1975 (40 FR 55913); 
Employment Standards Order No 76-2, dated Feb. 23, 1976 (41 FR 9016))

[43 FR 28469, June 30, 1978]



PART 530--EMPLOYMENT OF HOMEWORKERS IN CERTAIN INDUSTRIES--Table of Contents




                           Subpart A--General

Sec.
530.1  Definitions.
530.2  Restriction of homework.
530.3  Application forms for individual homeworker certificates.
530.4  Terms and conditions for the issuance of individual homeworker 
          certificates.
530.5  Investigation.
530.6  Termination of individual homeworker certificates.
530.7  Revocation and cancellation of individual homeworker 
          certificates.
530.8  Preservation of individual homeworker certificates.
530.9  Records and reports.
530.10  Delegation of authority to grant, deny, or cancel an individual 
          homeworker certificate.
530.11  Petition for review.
530.12  Special provisions.

               Subpart B--Homeworker Employer Certificates

530.101  General.
530.102  Requests for employer certificates.
530.103  Employer assurances.
530.104  Bonding or security payments.
530.105  Investigations.

    Subpart C--Denial/Revocation of Homeworker Employer Certificates

530.201  Conflict with State law.
530.202  Piece rates--work measurement.
530.203  Outstanding violations and open investigations.
530.204  Discretionary denial or revocation.
530.205  Mandatory denial or revocation.
530.206  Special circumstances.

                    Subpart D--Civil Money Penalties

530.301  General.
530.302  Amounts of civil money penalties.
530.303  Considerations in determining amounts.
530.304  Procedures for assessment.

                  Subpart E--Administrative Procedures

530.401  Applicability of procedures and rules.
530.402  Notice of determination.
530.403  Request for hearing.
530.404  Referral to Administrative Law Judge.
530.405  General.
530.406  Decision and order of Administrative Law Judge.
530.407  Procedures for initiating and undertaking review.
530.408  Notice of the Secretary to review decision.
530.409  Final decision of the Secretary.
530.410  Special procedures.
530.411  Emergency certificate revocation procedures.
530.412  Alternative summary proceedings.
530.413  Certification of the record.
530.414  Equal Access to Justice Act.

    Authority: Sec. 11, 52 Stat. 1066 (29 U.S.C. 211) as amended by sec. 
9, 63 Stat. 910 (29 U.S.C. 211(d)); Secretary's Order No. 6-84, 49 FR 
32473, August 14, 1984; and Employment Standards Order No. 85-01, June 
5, 1985.

[[Page 150]]


    Source: 24 FR 729, Feb. 3, 1959, unless otherwise noted.



                           Subpart A--General



Sec. 530.1  Definitions.

    (a) The meaning of the terms person, employ, employer, employee, 
goods, and production, as used in this part, is the same as in the Fair 
Labor Standards Act of 1938, as amended.
    (b) Administrator as used in this part means the Administrator of 
the Wage and Hour Division, Employment Standards Administration, U.S. 
Department of Labor, or an authorized representative of the 
Administrator.
    (c) Industrial homeworker and homeworker, as used in this part, mean 
any employee employed or suffered or permitted to perform industrial 
homework for an employer.
    (d) Industrial homework, as used in this part, means the production 
by any person in or about a home, apartment, tenement, or room in a 
residential establishment of goods for an employer who suffers or 
permits such production, regardless of the source (whether obtained from 
an employer or elsewhere) of the materials used by the homeworker in 
such production.
    (e) The women's apparel industry is defined as follows: The 
production of women's, misses' and juniors' dresses, washable service 
garments, blouses, and neckwear from woven or purchased knit fabric; 
women's, misses', children's and infants' underwear, nightwear, and 
negligees from woven fabrics; corsets and other body supporting garments 
from any material; other garments similar to the foregoing; and infants; 
and children's outerwear.
    (f) The jewelry manufacturing industry is defined as follows:
    (1)(i) The manufacturing, processing, or assembling, wholly or 
partially from any material, of jewelry, commonly or commercially so 
known. Jewelry as used herein includes without limitation, religious, 
school, college, and fraternal insignia; articles of ornament or 
adornment designed to be worn on apparel or carried on or about the 
person, including, without limitation, cigar and cigarette cases, 
holders, and lighters; watch cases; metal mesh bags and metal watch 
bracelets; and chain, mesh, and parts for use in the manufacture of any 
of the articles included in this definition. Jewelry as used in this 
part does not include pocket knives, cigar cutters, badges, emblems, 
military and naval insignia, belt buckles, and handbag and pocketbook 
frames and clasps, or commercial compacts and vanity cases, except when 
made from or embellished with precious metals or precious, semiprecious, 
synthetic or imitation stones, or the assaying, refining, and smelting 
of base or precious metals.
    (ii) The term parts as used in paragraph (e)(1)(i) of this section 
does not include parts which are used predominantly for products other 
than jewelry, such as springs, blades, and nail files. The term 
commercial compacts and vanity cases as used means compacts and vanity 
cases which bear the trade name or mark of a cosmetic manufacturer and 
are made for the purpose of distributing or advertising said cosmetics.
    (2) The manufacturing, cutting, polishing, encrusting, engraving, 
and setting of precious, semiprecious, synthetic, and imitation stones.
    (3) The manufacturing, drilling, and stringing of pearls, imitation 
pearls, and beads designed for use in the manufacture of jewelry.
    (4) The term hand-fashioned jewelry as used in Sec. 530.12(b) means 
articles of jewelry commonly known as genuine Navajo, Pueblo, Hopi, or 
Zuni handmade jewelry which in all elements of design, fashioning and 
ornamentation are handmade by methods and with the help of only such 
devices as permit the maker to determine the shape and design of each 
individual product: Provided, That silver used in the making of such 
jewelry shall be of at least nine hundred fineness, and that turquoise 
and other stones used shall be genuine stones, uncolored and untreated 
by artificial means: And provided further, That power machinery is 
permitted in the production of findings, in the cutting and polishing of 
stones, in the buffing and polishing of completed products, and in 
incidental functions. Equipment specifically prohibited shall include 
hand presses, foot presses, drop hammers, and similar equipment: And 
provided further, That solder may be of less silver content than nine 
hundred;

[[Page 151]]

And provided further, That findings may be mechanically made of any 
metal by Indians or others: And provided further, That turquoise and 
other stones may be cut and polished by Indians or others without 
restrictions as to methods or equipment used.
    (g) The knitted outerwear industry is defined as follows: The 
knitting from any yarn or mixture of yarns and the further 
manufacturing, dyeing or other finishing of knitted garments, knitted 
garment sections, or knitted garment accessories for use as external 
apparel or covering which are partially or completely manufactured in 
the same establishment as that where the knitting process is performed; 
and the manufacture of bathing suits from any purchased fabric: 
Provided, That the manufacturing, dyeing or other finishing of the 
following shall not be included:
    (1) Knitted fabric, as distinguished from garment sections or 
garments, for sale as such.
    (2) Fulled suitings, coatings, topcoatings, and overcoatings.
    (3) Garments or garment accessories made from purchased fabric, 
except bathing suits.
    (4) Gloves or mittens.
    (5) Hosiery.
    (6) Knitted garments or garment accessories for use as underwear, 
sleeping wear, or negligees.
    (7) Fleece-lined garments made from knitted fabric containing cotton 
only or containing any mixture of cotton and not more than 25 percent, 
by weight, of wool or animal fiber other than silk.
    (8) Knitted shirts of cotton or any synthetic fiber or any mixture 
of such fibers which have been knit on machinery of 10-cut or fine: 
Provided, That this exception shall not be construed to exclude from the 
knitted outerwear industry and the manufacturing, dyeing, or other 
finishing of knitted shirts made in the same establishment as that where 
the knitting process is performed, if such shirts are made wholly or in 
part of fibers other than those specified in this clause, or if such 
shirts of any fiber are knit on machinery coarser than 10-cut.
    (h) The gloves and mittens industry is defined as follows: The 
production of gloves and mittens from any material or combination of 
materials, except athletic gloves and mittens.
    (i) The button and buckle manufacturing industry is defined as 
follows: The manufacture of buttons, buckles, and slides, and the 
manufacture of blanks and parts for such articles from any material 
except metal, for use on apparel.
    (j) The handkerchief manufacturing industry is defined as follows: 
The manufacture of men's, women's and children's handkerchiefs, plain or 
ornamented, from any materials.
    (k) The embroideries industry is defined as follows: The production 
of all kinds of hand and machine-made embroideries and ornamental 
stitchings, including but not by way of limitation, tucking shirring, 
smocking, hemstitching, hand rolling, fagoting, Bonnez embroidery, 
appliqueing, crochet beading, hand drawing, machine drawing, rhinestone 
trimming, sequin trimming, spangle trimming, eyelets, passementerie, 
pleating, the application of rhinestones and nailheads, stamping and 
perforating of designs, Schifli embroidery and laces, burnt-out laces 
and velvets, Swiss handmachine embroidery, thread splitting, embroidery 
thread cutting, scallop cutting, lace cutting, lace making-up, making-up 
of embroidered yard goods, straight cutting of embroidery and cutting 
out of embroidery, embroidery trimmings, bindings (not made in textile 
establishments), pipings and emblems: Provided, That (1) the foregoing 
when produced or performed by a manufacturer of a garment, fabric or 
other article for use on such garment, fabric or other article, and (2) 
the manufacture of covered buttons and buckles, shall not be included.
    (l) As used throughout this part the terms ``Secretary'' or 
``Secretary of Labor'' shall mean the Secretary of Labor, U.S. 
Department of Labor, or his or her designee.

[24 FR 729, Feb. 3, 1959, as amended at 46 FR 50349, Oct. 9, 1981; 49 FR 
22036, May 24, 1984; 53 FR 45722, Nov. 10, 1988; 61 FR 19986, May 3, 
1996]



Sec. 530.2  Restriction of homework.

    Except as provided in subpart B of this part, no work in the 
industries defined in paragraphs (e) through (k) of

[[Page 152]]

Sec. 530.1 shall be done in or about a home, apartment, tenement, or 
room in a residential establishment unless a special homework 
certificate issued and in effect pursuant to this part has been obtained 
for each homeworker or unless the homeworker is so engaged under the 
supervision of a Sheltered Workshop, as defined in Sec. 525.2 of this 
chapter.

[53 FR 45722, Nov. 10, 1988]



Sec. 530.3  Application forms for individual homeworker certificates.

    Certificates authorizing the employment of industrial homeworkers in 
the industries defined in Sec. 530.1 may be issued on the following 
terms and conditions upon application therefore on forms provided by the 
Wage and Hour Division. Such forms shall be signed by both the 
homeworker and the employer.

(Approved by the Office of Management and Budget under control number 
1215-0005)

[24 FR 729, Feb. 3, 1959, as amended at 49 FR 18294, Apr. 30, 1984]



Sec. 530.4  Terms and conditions for the issuance of individual homeworker 
certificates.

    (a) Upon application by the homeworker and the employer on forms 
provided by the Wage and Hour Division, certificates may be issued to 
the applicant employer authorizing the employment of a particular worker 
in industrial homework in a particular industry, provided that the 
application is in proper form and sets forth facts showing that the 
worker:
    (1)(i) Is unable to adjust to factory work because of age or 
physical or mental disability; or
    (ii) Is unable to leave home because the worker's presence is 
required to care for an invalid in the home; and
    (2)(i) Was engaged in industrial homework in the particular industry 
for which the certificate is applied, as such industry is defined in 
Sec. 530.1, prior to: (a) April 4, 1942, in the button and buckle 
manufacturing industry; (b) November 2, 1942, in the embroideries 
industry; (c) April 1, 1941, in the gloves and mittens industry; (d) 
October 7, 1942, in the handkerchief manufacturing industry; (e) July 1, 
1941, in the jewelry manufacturing industry; or (f) March 5, 1942, in 
the women's apparel industry, except that if this requirement shall 
result in unusual hardship to the individual homeworker it shall not be 
applied; or
    (ii) Is engaged in industrial homework under the supervision of a 
State Vocational Rehabilitation Agency.
    (b) No homeworker shall perform industrial homework for more than 
one employer in the same industry, but homework employment in one 
industry shall not be a bar to the issuance of certificates for other 
industries.

(Information collection requirements contained in paragraph (a) were 
approved by the Office of Management and Budget under control number 
1215-0005)

[24 FR 729, Feb. 3, 1959, as amended at 43 FR 28470, June 30, 1978; 46 
FR 50349, Oct. 9, 1981; 49 FR 44270, Nov. 5, 1984; 53 FR 45722, Nov. 10, 
1988]



Sec. 530.5  Investigation.

    An investigation may be ordered in any case to obtain additional 
data or facts. A medical examination of the worker or invalid may be 
ordered or a certification of facts concerning eligibility for the 
certificate by designated officers of the State or Federal Government 
may be required.



Sec. 530.6  Termination of individual homeworker certificates.

    (a) A certificate shall be valid under the terms set forth in the 
certificate for a period to be designated by the Administrator or his 
authorized representative. Application for renewal of any certificate 
shall be filed in the same manner as an original application under this 
part.
    (b) No effective certificate shall expire until action on an 
application for renewal shall have been finally determined, provided 
that such application has been properly executed in accordance with the 
requirements, and filed not less than 15 nor more than 30 days prior to 
the expiration date. A final determination means either the granting of 
or initial denial of the application for renewal of a certificate, or 
withdrawal of the application. A ``properly executed'' application is 
one which

[[Page 153]]

contains the complete information required on the form.

[24 FR 729, Feb. 3, 1959, as amended at 27 FR 7020, July 25, 1962]



Sec. 530.7  Revocation and cancellation of individual homeworker certificates.

    Any certificate may be revoked for cause at any time. Violation of 
any provision of the Fair Labor Standards Act shall be sufficient 
grounds for revocation of all certificates issued to an employer, in 
which event no certificates shall be issued to the offending employer 
for a period of up to one year. Before any certificate is cancelled, 
however, interested parties shall be notified in writing of the facts 
warranting such cancellation and afforded an opportunity to demonstrate 
or achieve compliance. In appropriate circumstances, the Administrator 
shall afford an opportunity for a hearing to resolve the disputed 
matter.

[49 FR 44271, Nov. 5, 1984]



Sec. 530.8  Preservation of individual homeworker certificates.

    A copy of all certificates provided to the employer under this part 
shall be maintained for a period of at least three years after the last 
employment under the certificate.

[49 FR 44271, Nov. 5, 1984]



Sec. 530.9  Records and reports.

    The issuance of a certificate shall not relieve the employer of the 
duty of maintaining the records required in the regulations in part 516 
of this chapter and failure to keep such records shall be sufficient 
cause for the cancellation of certificates issued to such an employer.



Sec. 530.10  Delegation of authority to grant, deny, or cancel an individual 
homeworker certificate.

    The Administrator may from time to time designate and appoint 
members of the Administrator's staff or State Agencies as his authorized 
representatives with full power and authority to grant, deny, or cancel 
homework certificates.

[43 FR 28470, June 30, 1978]



Sec. 530.11  Petition for review.

    Any person aggrieved by the action of an authorized representative 
of the Administrator in granting or denying a certificate may, within 15 
days thereafter or within such additional time as the Administrator for 
cause shown may allow, file with the Administrator a petition for review 
of the action of such representative praying for such relief as is 
desired. Such petition for review, if duly filed, will be acted upon by 
the Administrator or an authorized representative of the Administrator 
who took no part in the proceeding being reviewed. All interested 
parties will be afforded an opportunity to present their views in 
support of or in opposition to the matters prayed for in the petition.



Sec. 530.12  Special provisions.

    (a) Gloves and mittens industry. Any certificate issued to an 
industrial homeworker by the New York State Department of Labor under 
paragraph II of Home Work Order No. 4 Restricting Industrial Homework in 
the Glove Industry, dated June 28, 1941, will be given effect by the 
Administrator as a certificate permitting the employment of the 
homeworker under the terms of Sec. 530.4 for the period during which 
such certificate shall continue in force.
    (b) Jewelry manufacturing industry. Nothing contained in the 
regulations in this part shall be construed to prohibit the employment, 
as homeworkers, of American Indians residing on the Navajo, Pueblo, and 
Hopi Indian Reservations, who are engaged in producing genuine hand-
fashioned jewelry on the Indian reservations mentioned, provided the 
employment of such homeworker is in conformity with the following 
conditions:
    (1) That each employer of one or more Indian homeworkers engaged in 
making hand-fashioned jewelry on these Indian reservations shall submit 
in duplicate to the regional office of the Wage and Hour Division for 
the region in which the employer's place of business is located, on 
April 1, August 1, and December 1 of each year, the name and address of 
such employee engaged during the preceding 4-month period in making 
hand-fashioned jewelry on Indian reservations;

[[Page 154]]

    (2) That each employer of one or more Indian homeworkers engaged in 
making hand-fashioned jewelry on these Indian reservations shall file 
copies of the piece rates in duplicate with the regional office of the 
Wage and Hour Division for the region in which the employer's place of 
business is located on April 1, August 1, and December 1 of each year, 
and
    (3) That each employer of one or more Indian homeworkers engaged in 
making hand-fashioned jewelry on these Indian reservations shall keep, 
maintain, and have available for inspection by the Administrator or the 
Administrator's authorized representative at any time, records and 
reports showing with respect to each of the homeworkers engaged in 
making hand-fashioned jewelry on these Indian reservations, the 
following information:
    (i) Name of the homeworker.
    (ii) Address of the homeworker.
    (iii) Date of birth of the homeworker, if under 19 years of age.
    (iv) Description of work performed.
    (v) Amount of cash wage payments made to the homeworker for each pay 
period.
    (vi) Date of such payment.
    (vii) Schedule of piece rates paid.

These records shall be kept by each employer for each of the employer's 
homeworkers engaged in making hand-fashioned jewelry on Indian 
reservations, as provided in this section, in lieu of the records 
required under Secs. 516.2 and 516.31 of this chapter: Provided, 
however, That nothing in this section shall relieve an employer from 
maintaining all other records required by part 516 of this chapter.

[24 FR 729, Feb. 3, 1959, as amended at 43 FR 28470, June 30, 1978]



               Subpart B--Homeworker Employer Certificates

    Source: 53 FR 45722, Nov. 10, 1988, unless otherwise noted.



Sec. 530.101  General.

    (a) Except as provided in subpart C, a certificate may be issued to 
an employer authorizing the employment of homeworkers in
    (1) The knitted outerwear, gloves and mittens, and embroideries 
industries as defined in paragraphs (g), (h), and (k), respectively, at 
Sec. 530.1, effective January 9, 1989;
    (2) In the button and buckle and handkerchief manufacturing 
industries as defined in paragraphs (i) and (j), respectively, of 
Sec. 530.1, effective July 9, 1989; and
    (3) In the jewelry industry as defined in paragraph (f) of 
Sec. 530.1, effective July 9, 1989, but only where the employer's 
homeworkers are engaged exclusively in the stringing of beads and other 
jewelry and the carding and packaging of jewelry. The terms ``carding 
and packaging of jewelry'' include the attaching of jewelry to cards, 
boxing and wrapping, and the use of common household glues available to 
the general public, but do not include potentially hazardous operations 
such as the use of industrial glues, epoxies, soldering irons, or 
heating elements.
    (b) This certificate may be issued irrespective of whether 
individual homeworkers meet the conditions set forth in paragraph (a) of 
Sec. 530.4 of Subpart A. Unless suspended or revoked, such certificates 
are valid for two-year periods. Applications for renewals must be 
submitted no later than thirty (30) days prior to the expiration date of 
the current certificate. Except as provided in subpart A, in the absence 
of a certificate, the employment of homeworkers in these industries is 
prohibited, and an employer violating this prohibition is subject to all 
the sanctions provided in the Fair Labor Standards Act and in this part, 
including an injunction restraining the employment of homeworkers.
    (c) Certificates authorizing such employment may be issued on the 
following terms and conditions upon written application to the 
Administrator, Wage and Hour Division, Employment Standards 
Administration, U.S. Department of Labor, 200 Constitution Avenue, NW., 
Washington, DC 20210.



Sec. 530.102  Requests for employer certificates.

    The initial request for certification or renewal application shall 
be signed by the employer and shall contain the name of the firm, its 
mailing address,

[[Page 155]]

the physical location of the firm's principal place of business and a 
description of the business operations and items produced. In addition, 
the initial or renewal application shall contain the names, addresses, 
and languages (if other than English) spoken by the homeworkers that are 
currently employed (if any) or expected to be employed. The employer 
shall also provide the Administrator, within thirty (30) days, a notice 
of each change of address of the principal place of business. The 
notification shall be in writing and addressed to the Administrator, 
Wage and Hour Division, Employment Standards Administration, 200 
Constitution Avenue, NW., Washington, DC 20210.



Sec. 530.103  Employer assurances.

    In order to be granted a certificate authorizing the employment of 
industrial homeworkers, the employer must provide written assurances 
concerning the employment of homeworkers subject to section 11(d) of the 
Fair Labor Standards Act to the effect that:
    (a) All homeworkers shall be paid in accordance with the monetary 
provisions of the Act.
    (b) All homeworkers shall be employed in compliance with the child 
labor provisions contained in section 12 of the Act and regulations and 
orders issued pursuant to section 12. All homeworkers will be instructed 
not to permit minors to work in violation of such provisions.
    (c) Records of hours worked and wages paid shall be maintained in 
accordance with section 11 of the Act and part 516 of this chapter.
    (d) All homeworkers shall complete homeworker handbooks in 
accordance with Sec. 516.31 of part 516.
    (e) All homeworkers will be instructed to accurately record all 
hours worked, piece work information, and business-related expenses in 
the handbooks.
    (f) All records shall be made available for inspection and 
transcription by the Administrator or a duly authorized and designated 
representative, or transcription by the employer upon written request.
    (g) Piece rates paid to homeworkers shall be established using stop 
watch time studies or other work measurement methods.
    (h) All homeworkers shall be encouraged to cooperate with the 
Department in any investigation that may be made.
    (i) With respect to jewelry manufacturing, no operations other than 
the stringing of beads and other jewelry and the carding and packaging 
of jewelry will be performed by homeworkers.



Sec. 530.104  Bonding or security payments.

    (a) Where in the Administrator's judgment there is not sufficient 
reason to believe that the Act will be complied with or that money will 
be available if violations of the Act occur, the Administrator may 
condition issuance or renewal of a certificate to an employer upon the 
furnishing of a bond with a surety or sureties satisfactory to the 
Administrator.
    (b) The Administrator shall condition issuance or reinstatement of a 
certificate to any employer whose application for a certificate had 
previously been denied, or whose certificate had been revoked, upon the 
furnishing of a bond.
    (c) Any bond required by the Administrator under paragraph (a) or 
(b) of this section shall be in an amount determined by the 
Administrator, up to $2500 for each homeworker to be employed by such 
employer under the certificate. In lieu of a bond, the employer may 
furnish a cash payment of equal amount, to be held in a special deposit 
account by the Administrator for the period during which the certificate 
is in effect. Such bond, or cash payment, shall be subject to payment or 
forfeiture, in whole or in part, upon a final determination that the 
employer has failed to pay minimum wages or overtime compensation to 
homeworkers in accordance with the Act. Any sums thus paid or forfeited 
to the Administrator shall be disbursed to affected homeworkers in 
accordance with section 16(c) of the Act.
    (d) At the Administrator's discretion, the obligation of a bond may 
be relieved, and any cash payment held as

[[Page 156]]

security in lieu thereof may be refunded (together with any interest 
accrued thereon), upon a subsequent determination that the employer is 
in compliance with the Act and that sufficient funds will be available 
to meet back wage payment obligations in the event of violations of the 
Act.



Sec. 530.105  Investigations.

    Any employer in a restricted industry who requests certification to 
employ homeworkers will be investigated promptly after the issuance of 
the certificate by the Wage and Hour Division. Where such an employer is 
found to be in violation of the FLSA, and the violations are corrected 
and future compliance is promised, the firm will be reinvestigated to 
assure that full FLSA compliance has, in fact, been achieved.



    Subpart C--Denial/Revocation of Homeworker Employer Certificates

    Source: 53 FR 45723, Nov. 10, 1988, unless otherwise noted.



Sec. 530.201  Conflict with State law.

    No certificate will be issued pursuant to Sec. 530.101 of subpart B 
above authorizing the employment of homeworkers in an industry in a 
State where the Governor (or authorized representative) has advised the 
Administrator of the Wage and Hour Division in writing that the 
employment of homeworkers in such industry, as defined in paragraphs (f) 
through (k) of Sec. 530.1, is illegal by virtue of a State labor 
standards or health and safety law.



Sec. 530.202  Piece rates--work measurement.

    (a) No certificate will be issued pursuant to Sec. 530.101 of 
subpart B to an employer who pays homeworkers based on piece rates 
unless the employer establishes the piece rates for the different types 
of items produced using stop watch time studies or other work 
measurement methods. Documentation of the work measurements used to 
establish the piece rates, and the circumstances under which such 
measurements were conducted shall be retained for three years and made 
available on request to the Wage and Hour Division.
    (b) The fact that an employer bases piece rates on work measurements 
which indicate that the homeworkers would receive at least the minimum 
wage at such piece rate(s) does not relieve the employer from the Act's 
requirement that each homeworker actually receive not less than the 
minimum wage for all hours worked.



Sec. 530.203  Outstanding violations and open investigations.

    A homework certificate will not be issued or renewed by the 
Administrator if, within the previous three years, the Administrator has 
found and notified the applicant of a monetary violation of the Fair 
Labor Standards Act in an amount certain, or the Administrator has 
assessed a civil money penalty pursuant to subpart D of these 
regulations or part 579 of this chapter (child labor), and such amounts 
are unpaid, or if the applicant is the subject of a revocation 
proceeding at the time of the application for renewal, or the applicant 
is the subject of an open investigation.



Sec. 530.204  Discretionary denial or revocation.

    Where the Administrator finds that the employment of homeworkers 
under a certificate is likely to result in violations of the Fair Labor 
Standards Act, the regulations issued thereunder, or the assurances 
required by this part, the Administrator may deny or revoke the 
certificate.



Sec. 530.205  Mandatory denial or revocation.

    The Administrator shall deny or revoke a certificate in accordance 
with the following standards and for the period specified in the 
standards:
    (a) Serious wage violations. Upon a finding by the Administrator of 
a serious wage violation, a certificate shall be denied (including 
refusal to renew) or revoked for one year. A serious wage violation is 
defined as minimum wage or overtime pay violations of the Act totalling 
$10,000 or more with respect to homeworkers; or minimum wage violations 
where 10 percent or more of a certificate holder's homeworkers (but in 
all cases at least two homeworkers)

[[Page 157]]

failed to receive at least 80 percent of the minimum wage for all hours 
worked for 6 or more weeks in any 3 month period; or minimum wage or 
overtime pay violations affecting more than half of the homeworkers of 
the certificate holder for 6 or more weeks in any 3 month period. All 
other wage violations are deemed non-serious wage violations for 
purposes of this section.
    (b) Repeated wage violations. For repeated wage violations found by 
the Administrator, a certificate shall be denied or revoked for one to 
three years, depending on the seriousness and frequency of the 
violations.
    (c) Child labor violations. Upon a finding by the Administrator of a 
violation of the child labor provisions of section 12 of the Fair Labor 
Standards Act and the regulations at part 570 of this title, a 
certificate shall be denied or revoked for one year. Upon a second 
finding by the Administrator of such a violation, the certificate shall 
be denied or revoked for three years.
    (d) Failure to pay back wages or civil money penalties judged owing. 
Upon the failure of a certificate holder to pay within 60 days back 
wages or civil money penalties finally judged by a court, administrative 
law judge or other appropriate authority, as the case may be, to be owed 
by the certificate holder, or agreed to be paid by the certificate 
holder, or within such longer period as may be specified in the final 
order or agreement, a certificate shall be denied or revoked for up to 
one year or for such period as such obligation shall remain unpaid if 
longer than one year.
    (e) Failure to cooperate in an investigation. Where the 
Administrator finds obstruction of or other failure to cooperate in a 
Wage and Hour investigation by a certificate holder which impedes the 
investigation, the certificate shall be denied or revoked for a period 
of one to three years, depending on the circumstances. For purposes of 
this regulation, cooperation includes providing records upon request to 
Wage and Hour compliance officers, identifying homeworkers of the 
certificate holder, and encouraging homeworkers to make themselves 
available in connection with an investigation.
    (f) Serious recordkeeping violations. Upon a finding by the 
Administrator that a certificate holder has engaged in a serious 
recordkeeping violation, the certificate may be revoked for up to one 
year. Upon a second finding by the Administrator of a serious 
recordkeeping violation, a certificate shall be denied or revoked for 
one to three years. A serious recordkeeping violation is defined as one 
where, either through errors in or omissions of required information, 
the name and current address of homeworkers and the data which is 
necessary for the accurate determination of hours worked by or wages 
paid to homeworkers or data necessary for the computation of wages owed 
to homeworkers is unavailable with respect to 10 percent or more of the 
homeworkers.
    (g) Deliberate misstatement in an application for a certificate or 
in other documents. Upon a finding by the Administrator of a deliberate 
misstatement of a material fact in an application for a certificate, in 
payroll records, or in any other information submitted to the Wage and 
Hour Division or maintained by the employer pursuant to these 
regulations, the certificate shall be denied or revoked for one to three 
years.
    (h) Discrimination against a homeworker. Upon a finding by the 
Administrator that a certificate holder has discharged or otherwise 
discriminated against a homeworker with respect to the homeworker's 
compensation or terms, conditions, or privileges of employment because 
the homeworker engaged in protected activity, the certificate shall be 
denied or revoked for three years. Protected activity is defined as: (1) 
Any complaint of a violation of the Act to the employer, the Department 
or other appropriate authority, or (2) any action which furthers the 
enforcement of or compliance with the Act, such as giving information to 
a Wage and Hour compliance officer.



Sec. 530.206  Special circumstances.

    At the discretion of the Administrator, a certificate need not be 
denied or revoked pursuant to Secs. 530.204 or 530.205 of this subpart 
if the Administrator finds all of the following:

[[Page 158]]

    (a) The certificate holder, despite the exercise of due care, did 
not know and did not have reason to know of the violations;
    (b) All back wages and civil money penalties found by the 
Administrator to be owing by the certificate holder have been paid; and
    (c) The certificate holder has taken appropriate steps to prevent 
recurrence of the violations.



                    Subpart D--Civil Money Penalties

    Source: 53 FR 45724, Nov. 10, 1988, unless otherwise noted.



Sec. 530.301  General.

    A system of civil money penalties is established to provide a remedy 
for any violation of the FLSA related to homework (except child labor 
violations, which are subject to civil money penalties pursuant to part 
579 of this chapter), or for any violation of the homeworker regulations 
or employers' assurances pursuant to this part, which are not so serious 
as to warrant denial or revocation of a certificate. Accordingly, no 
civil money penalty will be assessed for conduct which serves as the 
basis of proposed denial or revocation of a certificate. (See subpart C 
of this part.) Civil money penalties will be assessed only against 
employers who are operating under a certificate or who are seeking 
certification.



Sec. 530.302  Amounts of civil money penalties.

    (a) A civil money penalty, not to exceed $500 per affected 
homeworker for any one violation, may be assessed for any violation of 
the Act or of this part or of the assurances given in connection with 
the issuance of a certificate.
    (b) The amount of civil money penalties shall be determined per 
affected homeworker within the limits set forth in the following 
schedule, except that no penalty shall be assessed in the case of 
violations which are deemed to be de minimis in nature:

------------------------------------------------------------------------
                                        Penalty per affected homeworker
                                     -----------------------------------
         Nature of violation                                  Repeated,
                                        Minor   Substantial  intentional
                                                              or knowing
------------------------------------------------------------------------
Recordkeeping.......................   $10-100    $100-200     $200-500
Monetary violations.................    10-100     100-200   ...........
Employment of homeworkers without a   ........     100-200      200-500
 certificate........................
Other violations of statutes,           10-100     100-200      200-500
 regulations or employer assurances.
------------------------------------------------------------------------



Sec. 530.303  Considerations in determining amounts.

    (a) In determining the amount of a penalty within any range, the 
Administrator shall take into account the presence or absence of 
circumstances such as the following:
    (1) Good faith attempts to comply with the Act or regulations;
    (2) Extent to which the violation is under the employer's control;
    (3) Non-culpable ignorance of the requirements of the Act or 
regulations;
    (4) False documents or representations; and
    (5) Exercise of due care.
    (b) An employer's financial inability to meet obligations under the 
Act shall not constitute a mitigating or extenuating circumstance.
    (c) No civil money penalty shall be assessed against an employer, 
who applies for a certificate, solely for employing homeworkers, 
provided the employer is not currently under investigation by the Wage 
and Hour Division.



Sec. 530.304  Procedures for assessment.

    Assessment of penalties pursuant to this section, including 
administrative proceedings, shall be in accordance with the procedures 
set out in subpart E of this part.



                  Subpart E--Administrative Procedures

    Source: 53 FR 45725, Nov. 10, 1988, unless otherwise noted.

[[Page 159]]



Sec. 530.401  Applicability of procedures and rules.

    The procedures and rules contained herein prescribe the 
administrative process which will be applied with respect to a 
determination to deny (including refusal to renew) or revoke a 
certificate and to a determination to assess civil money penalties. 
Special rules and procedures for the emergency revocation of 
certificates are prescribed in Sec. 530.412 of this subpart.



Sec. 530.402  Notice of determination.

    Whenever the Administrator determines to deny or revoke a 
certificate or determines to assess a civil money penalty, the person 
affected by such determination shall be notified of the determination in 
writing, by certified mail to the last known address. The notice 
required shall:
    (a) Set forth the determination of the Administrator, including the 
specific statutory or regulatory provision or assurance violated, the 
reasons for denying or revoking a certificate, or the amount of any 
civil money penalty assessment and the reason or reasons therefor.
    (b) Set forth the right to request a hearing on such determination.
    (c) Set forth the time and method for requesting a hearing, and the 
procedures relating thereto, as set forth in Sec. 530.403 of this 
subpart.
    (d) Inform any affected person or persons that in lieu of formal 
proceedings there is available an alternative summary proceeding under 
Sec. 530.412 of this subpart.
    (e) Inform any affected persons that in the absence of a timely 
request for a hearing the determination of the Administrator shall 
become final and unappealable.



Sec. 530.403  Request for hearing.

    (a) Except in the case of an emergency revocation under Sec. 530.411 
of this subpart, a request for an administrative hearing on a 
determination referred to in Sec. 530.402 of this subpart shall be made 
in writing to the Administrator of the Wage and Hour Division, 
Employment Standards Administration, U.S. Department of Labor, 
Washington DC 20210, and must be received no later than thirty (30) days 
after issuance of the notice referred to in Sec. 530.402 of this 
subpart.
    (b) No particular form is prescribed for any request for a hearing 
permitted by this part. However, any such request shall be typewritten 
or legibly written; specify the issue or issues stated in the notice of 
determination giving rise to such request; state the specific reason or 
reasons why the person requesting the hearing believes such 
determination is in error; be signed by the person making the request or 
by an authorized representative of such person; and include the address 
at which such person or authorized representative desires to receive 
further communications relating thereto.
    (c) In the case of an emergency revocation, a request for an 
administrative hearing shall be made in writing to the Chief 
Administrative Law Judge, U.S. Department of Labor, 1111 20th Street, 
NW., suite 700, Washington, DC 20036, and must be received no later than 
20 days after the issuance of the notice referred to in Sec. 530.402 of 
this subpart.



Sec. 530.404  Referral to Administrative Law Judge.

    Upon receipt of a timely request for a hearing, the request and a 
copy of the notice of administrative determination complained of, shall, 
by Order of Reference, be referred to the Chief Administrative Law 
Judge, for a determination in an administrative proceeding as provided 
herein. The notice of administrative determination and request for 
hearing shall, respectively, be given the effect of a complaint and 
answer thereto for purposes of the administrative proceedings, subject 
to any amendment that may be permitted under 29 CFR part 18.



Sec. 530.405  General.

    Except as specifically provided in these regulations, the ``Rules of 
Practice and Procedure for Administrative Hearings before the Office of 
Administrative Law Judges'' established by the Secretary at 29 CFR part 
18 shall apply to administrative proceedings described in this subpart.

[[Page 160]]



Sec. 530.406  Decision and order of Administrative Law Judge.

    (a) The Administrative Law Judge shall prepare, after completion of 
the hearing and closing of the record, a decision on the issues referred 
by the Administrator.
    (b) The decision of the Administrative Law Judge shall include a 
statement of findings and conclusions, with reasons and basis therefor, 
upon each material issue presented on the record. If the Administrative 
Law Judge finds that the Administrator has established by a 
preponderance of the evidence the factual basis for the determination to 
deny or revoke a certificate or to assess a civil money penalty, that 
determination shall be affirmed. The decision shall also include an 
appropriate order which may affirm, deny, reverse, or modify, in whole 
or in part, the determination of the Administrator. The reason or 
reasons for such order shall be stated in the decision.
    (c) The decision shall be served on all parties and the Secretary in 
person or by certified mail. The decision when served by the 
Administrative Law Judge shall constitute the final order of the 
Department of Labor unless the Secretary, as provided for in 
Sec. 530.407 of this subpart, determines to review the decision.



Sec. 530.407  Procedures for initiating and undertaking review.

    Any party desiring review of the decision of the Administrative Law 
Judge may petition the Secretary to review the decision. To be 
effective, such petition must be received by the Secretary within 30 
days of the date of the decision of the Administrative Law Judge. Copies 
of the petition shall be served on all parties and on the Chief 
Administrative Law Judge. If the Secretary does not issue a notice 
accepting a petition for review within 30 days after receipt of a timely 
filing of the petition, or within 30 days of the date of the decision if 
no petition has been received, the decision of the Administrative Law 
Judge shall be deemed the final agency action.



Sec. 530.408  Notice of the Secretary to review decision.

    Whenever the Secretary determines to review the decision and order 
of an Administrative Law Judge, the Secretary shall notify each party of 
the issue or issues raised; the form in which submission shall be made 
(i.e., briefs, oral argument, etc.); and, the time within which such 
presentation shall be submitted.



Sec. 530.409  Final decision of the Secretary.

    The Secretary's final decision shall be served upon all parties and 
the Administrative Law Judge, in person or by certified mail.



Sec. 530.410  Special procedures.

    In a revocation proceeding pursuant to Sec. 530.205(d) of subpart C 
of this part arising as a result of a certificate holder's failure to 
pay back wages or civil money penalties judged owing, the Administrator 
may file a motion for expedited decision, attaching to the notice, by 
affidavit or other means, evidence that a final order has been entered 
or agreement signed requiring respondent to pay back wages or civil 
money penalties and that the back wages or civil money penalties have 
not been paid. The respondent in the proceeding shall have 20 days in 
which to file a countering affidavit or other evidence. If no evidence 
countering the material assertions of the Administrator has been 
submitted within 20 days, the Administrative Law Judge shall, within 30 
days thereafter, affirm the revocation or denial of the certificate. If 
the respondent does timely file such evidence, the Administrative Law 
Judge shall schedule a hearing pursuant to Sec. 530.411(c) of this 
subpart and the case shall be subject to the expeditious procedures 
following therein.



Sec. 530.411  Emergency certificate revocation procedures.

    (a) When the Administrator determines that immediate revocation of a 
homework certificate is necessary to safeguard the payment of minimum 
wages to homeworkers, a notice of proposed emergency revocation of a 
certificate shall be sent to the certificate

[[Page 161]]

holder pursuant to Sec. 530.402 of this subpart setting forth reasons 
requiring emergency revocation of the certificate.
    (b) If no request for a hearing pursuant to Sec. 530.403 of this 
subpart is received within 20 days of the date of receipt of the notice 
by the certificate holder, the proposed revocation of the certificate 
shall become final.
    (c) The Office of Administrative Law Judges shall notify the parties 
at their last known address, of the date, time and place for the 
hearing, which shall be no more than 60 days from the date of receipt of 
the request for the hearing. All parties shall be given at least 5 days 
notice of such hearing. No requests for postponement shall be granted 
except for compelling reasons.
    (d) The Administrative Law Judge shall issue a decision pursuant to 
Sec. 530.406 of this subpart within 30 days after the termination of a 
proceeding at which evidence was submitted. The decision shall be served 
on all parties and the Secretary by certified mail and shall constitute 
the final order of the Department of Labor unless the Secretary 
determines to review the decision.
    (e) Any party desiring review of the decision of the Administrative 
Law Judge may petition the Secretary to review the decision of the 
Administrative Law Judge. To be effective, such petition must be 
received by the Secretary within 30 days of the date of the decision of 
the Administrative Law Judge. If the Secretary does not issue a notice 
accepting a petition for review within 15 days after receipt of a timely 
filing of the petition, or within 30 days of the date of the decision if 
no petition is filed, the decision of the Administrative Law Judge shall 
be deemed the final agency action.
    (f) The Secretary's decision shall be issued within 60 days of the 
notice by the Secretary accepting the submission, and shall be served 
upon all parties and the Administrative Law Judge, in person or by 
certified mail.



Sec. 530.412  Alternative summary proceedings.

    In lieu of an administrative hearing before an Administrative Law 
Judge under the above procedures, an applicant or certificate holder who 
does not dispute the factual findings of the Administrator may, within 
30 days of the date of issuance of the notice of denial, revocation, or 
assessment (or within 20 days in the case of a notice of emergency 
revocation) petition the Administrator instead to reconsider the denial 
or revocation of the certificate or the assessment of civil money 
penalties. An applicant or certificate holder electing this informal 
procedure may appear before the Administrator in person, make a written 
submission to the Administrator, or both. Such reconsideration by the 
Administrator shall be available only upon waiver by the applicant or 
certificate holder of the formal hearing procedures provided by the 
above regulations.



Sec. 530.413  Certification of the record.

    Upon receipt of a complaint seeking review of a final decision 
issued pursuant to this part filed in a United States District Court, 
after the administrative remedies have been exhausted, the Chief 
Administrative Law Judge shall promptly index, certify and file with the 
appropriate United States District Court, a full, true, and correct copy 
of the entire record, including the transcript of proceedings.



Sec. 530.414  Equal Access to Justice Act.

    Proceedings under this part are not subject to the provisions of the 
Equal Access to Justice Act. In any hearing conducted pursuant to these 
regulations, Administrative Law Judges shall have no power or authority 
to award attorney fees or other litigation expenses pursuant to the 
Equal Access to Justice Act.

[[Page 162]]



PART 531--WAGE PAYMENTS UNDER THE FAIR LABOR STANDARDS ACT OF 1938--Table 
of Contents




                     Subpart A--Preliminary Matters

Sec.
531.1  Definitions.
531.2  Purpose and scope.

  Subpart B--Determinations of ``Reasonable Cost'' and ``Fair Value''; 
               Effects of Collective Bargaining Agreements

531.3  General determinations of ``reasonable cost''.
531.4  Making determinations of ``reasonable cost''.
531.5  Making determinations of ``fair value''.
531.6  Effects of collective bargaining agreements.
531.7  Request for review of tip credit.
531.8  Petitions to issue, amend, or repeal rules, including 
          determinations, under this part.

                       Subpart C--Interpretations

531.25  Introductory statement.
531.26  Relation to other laws.

                        How Payments May Be Made

531.27  Payment in cash or its equivalent required.
531.28  Restrictions applicable where payment is not in cash or its 
          equivalent.
531.29  Board, lodging, or other facilities.
531.30  ``Furnished'' to the employee.
531.31  ``Customarily'' furnished.
531.32  ``Other facilities.''
531.33  ``Reasonable cost''; ``fair value''.
531.34  Payment in scrip or similar medium not authorized.
531.35  ``Free and clear'' payment; ``kick-backs''.

           Payment Where Additions or Deductions Are Involved

531.36  Nonovertime workweeks.
531.37  Overtime workweeks.

              Payments Made to Persons Other Than Employees

531.38  Amounts deducted for taxes.
531.39  Payments to third persons pursuant to court order.
531.40  Payments to employee's assignee.

                  Payment of Wages to Tipped Employees

531.50  Statutory provisions with respect to tipped employees.
531.51  Conditions for taking tip credits in making wage payments.
531.52  General characteristics of ``tips.''
531.53  Payments which constitute tips.
531.54  Tip pooling.
531.55  Examples of amounts not received as tips.
531.56  ``More than $20 a month in tips.''
531.57  Receiving the minimum amount ``customarily and regularly.''
531.58  Initial and terminal months.
531.59  The tip wage credit.
531.60  Overtime payments.

    Authority: Sec. 3(m), 52 Stat. 1060; sec. 2, 75 Stat. 65; sec. 101, 
80 Stat. 830; 29 U.S.C. 203 (m) and (t).

    Source: 32 FR 13575, Sept. 28, 1967, unless otherwise noted.



                     Subpart A--Preliminary Matters



Sec. 531.1  Definitions.

    (a) Administrator means the Administrator of the Wage and Hour 
Division or his authorized representative. The Secretary of Labor has 
delegated to the Administrator the functions vested in him under section 
3(m) of the Act.
    (b) Act means the Fair Labor Standards Act of 1938, as amended.



Sec. 531.2  Purpose and scope.

    (a) Section 3(m) of the Act defines the term ``wage'' to include the 
``reasonable cost'', as determined by the Secretary of Labor, to an 
employer of furnishing any employee with board, lodging, or other 
facilities, if such board, lodging, or other facilities are customarily 
furnished by the employer to his employees. In addition, section 3(m) 
gives the Secretary authority to determine the ``fair value.'' of such 
facilities on the basis of average cost to the employer or to groups of 
employers similarly situated, on average value to groups of employees, 
or other appropriate measures of ``fair value.'' Whenever so determined 
and when applicable and pertinent, the ``fair value'' of the facilities 
involved shall be includable as part of ``wages'' instead of the actual 
measure of the costs of those facilities. The section provides, however, 
that the cost of board, lodging, or other facilities shall not be 
included as part of ``wages'' if excluded therefrom by a bona fide 
collective bargaining agreement. Section 3(m) also provides a method for 
determining the wage of a tipped employee.
    (b) This part 531 contains any determinations made as to the 
``reasonable

[[Page 163]]

cost'' and ``fair value'' of board, lodging, or other facilities having 
general application, and describes the procedure whereby determinations 
having general or particular application may be made. The part also 
interprets generally the provisions of section 3(m) of the Act, 
including the term ``tipped employee'' as defined in section 3(t).



  Subpart B--Determinations of ``Reasonable Cost'' and ``Fair Value''; 
               Effects of Collective Bargaining Agreements



Sec. 531.3  General determinations of ``reasonable cost.''

    (a) The term reasonable cost as used in section 3(m) of the Act is 
hereby determined to be not more than the actual cost to the employer of 
the board, lodging, or other facilities customarily furnished by him to 
his employees.
    (b) Reasonable cost does not include a profit to the employer or to 
any affiliated person.
    (c) Except whenever any determination made under Sec. 531.4 is 
applicable, the ``reasonable cost'' to the employer of furnishing the 
employee with board, lodging, or other facilities (including housing) is 
the cost of operation and maintenance including adequate depreciation 
plus a reasonable allowance (not more than 5 1/2 percent) for interest 
on the depreciated amount of capital invested by the employer: Provided, 
That if the total so computed is more than the fair rental value (or the 
fair price of the commodities or facilities offered for sale), the fair 
rental value (or the fair price of the commodities or facilities offered 
for sale) shall be the reasonable cost. The cost of operation and 
maintenance, the rate of depreciation, and the depreciated amount of 
capital invested by the employer shall be those arrived at under good 
accounting practices. As used in this paragraph, the term ``good 
accounting practices'' does not include accounting practices which have 
been rejected by the Internal Revenue Service for tax purposes, and the 
term ``depreciation'' includes obsolescence.
    (d)(1) The cost of furnishing ``facilities'' found by the 
Administrator to be primarily for the benefit or convenience of the 
employer will not be recognized as reasonable and may not therefore be 
included in computing wages.
    (2) The following is a list of facilities found by the Administrator 
to be primarily for the benefit of convenience of the employer. The list 
is intended to be illustrative rather than exclusive: (i) Tools of the 
trade and other materials and services incidental to carrying on the 
employer's business; (ii) the cost of any construction by and for the 
employer; (iii) the cost of uniforms and of their laundering, where the 
nature of the business requires the employee to wear a uniform.



Sec. 531.4  Making determinations of ``reasonable cost.''

    (a) Procedure. Upon his own motion or upon the petition of any 
interested person, the Administrator may determine generally or 
particularly the ``reasonable cost'' to an employer of furnishing any 
employee with board, lodging, or other facilities, if such board, 
lodging, or other facilities are customarily furnished by the employer 
to his employees. Notice of proposed determination shall be published in 
the Federal Register, and interested persons shall be afforded an 
opportunity to participate through submission of written data, views, or 
arguments. Such notice shall indicate whether or not an opportunity will 
be afforded to make oral presentations. Whenever the latter opportunity 
is afforded, the notice shall specify the time and place of any hearing 
and the rules governing such proceedings. Consideration shall be given 
to all relevant matter presented in the adoption of any rule.
    (b) Contents of petitions submitted by interested persons. Any 
petition by an employee or an authorized representative of employees, an 
employer or group of employers, or other interested persons for a 
determination of ``reasonable cost'' shall include the following 
information:
    (1) The name and location of the employer's or employers' place or 
places of business;
    (2) A detailed description of the board, lodging, or other 
facilities furnished by the employer or employers, whether or not these 
facilities are customarily furnished by the employer or

[[Page 164]]

employers, and whether or not they are alleged to constitute ``wages'';
    (3) The charges or deductions made for the facility or facilities by 
the employer or employers;
    (4) When the actual cost of the facility or facilities is known an 
itemized statement of such cost to the employer or employers of the 
furnished facility or facilities;
    (5) The cash wages paid;
    (6) The reason or reasons for which the determination is requested, 
including any reason or reasons why the determinations in Sec. 531.3 
should not apply; and
    (7) Whether an opportunity to make an oral presentation is 
requested; and if it is requested, the inclusion of a summary of any 
expected presentation.



Sec. 531.5  Making determinations of ``fair value.''

    (a) Procedure. The procedures governing the making of determinations 
of the ``fair value'' of board, lodging, or other facilities for defined 
classes of employees and in defined areas under section 3(m) of the Act 
shall be the same as that prescribed in Sec. 531.4 with respect to 
determinations of ``reasonable cost.''
    (b) Petitions of interested persons. Any petition by an employee or 
an authorized representative of employees, an employer or group of 
employers, or other interested persons for a determination of ``fair 
value'' under section 3(m) of the Act shall contain the information 
required under paragraph (b) of Sec. 531.4, and in addition, to the 
extent possible, the following:
    (1) A proposed definition of the class or classes of employees 
involved;
    (2) A proposed definition of the area to which any requested 
determination would apply;
    (3) Any measure of ``fair value'' of the furnished facilities which 
may be appropriate in addition to the cost of such facilities.



Sec. 531.6  Effects of collective bargaining agreements.

    (a) The cost of board, lodging, or other facilities shall not be 
included as part of the wage paid to any employee to the extent it is 
excluded therefrom under the terms of a bona fide collective bargaining 
agreement applicable to the particular employee.
    (b) A collective bargaining agreement shall be deemed to be ``bona 
fide'' when it is made with a labor organization which has been 
certified pursuant to the provision of section 7(b)(1) or 7(b)(2) of the 
Act by the National Labor Relations Board, or which is the certified 
representative of the employees under the provisions of the National 
Labor Relations Act, as amended, or the Railway Labor Act, as amended.
    (c) Collective bargaining agreements made with representatives who 
have not been so certified will be ruled on individually upon submission 
to the Administrator.



Sec. 531.7  Request for review of tip credit.

    (a) Any employee (either himself or acting through his 
representative) may request the Administrator to determine whether the 
actual amount of tips received by him is less than the amount determined 
by the employer as a wage credit. If it is shown to the satisfaction of 
the Administrator that the actual amount of tips is the lesser of these 
amounts, the amount paid the employee by the employer shall be deemed to 
have been increased by such lesser amount.
    (b) Requests for review and determination may be made either orally 
or in writing to any investigator or any regional, district, or field 
office of the Wage and Hour Division or to the Administrator in 
Washington, DC 20210. Requests should be accompanied by a statement of 
tips received each week or each month over a representative period as 
reported by the employee to the employer for purposes of Internal 
Revenue Service reports. Such a request should also be accompanied by a 
statement showing the tip credit taken by the employer and any other 
information deemed pertinent by the petitioner. In any instance in which 
it appears that the tip credit claimed by the employer exceeds the 
amount of tips actually received by the tipped employee, the employer 
shall be apprised of the facts made available to the Wage and Hour 
Division and be afforded the opportunity to submit any evidence he may 
care to present in support of his

[[Page 165]]

claim for tip credit before a determination is made. Such determination 
shall be made by the official representative of the Wage and Hour 
Division assigned to make an investigation of the employing 
establishment.



Sec. 531.8  Petitions to issue, amend, or repeal rules, including determinations, 
under this part.

    Any interested person may petition for the issuance, amendment, or 
repeal of rules, including determinations under this part. Any such 
petition shall be directed in writing to the Administrator. Any such 
petition shall include: (a) A declaration of the petitioner's interest 
in the proposed action; (b) a statement of the rule-making action 
sought; and (c) any data available in support of the petition. Whenever 
a petitioner seeks determination of ``reasonable cost'' or ``fair 
value'' the statement of rule-making sought shall contain the 
information required under Sec. 531.4(b) or Sec. 531.5(b), as the case 
may be.



                       Subpart C--Interpretations



Sec. 531.25  Introductory statement.

    (a) The ultimate decisions on interpretations of the Act are made by 
the courts (Mitchell v. Zachry, 362 U.S. 310; Kirschbaum v. Walling, 316 
U.S. 517). Court decisions supporting interpretations contained in this 
subpart are cited where it is believed they may be helpful. On matters 
which have not been determined by the courts, it is necessary for the 
Secretary of Labor and the Administrator to reach conclusions as to the 
meaning and the application of provisions of the law in order to carry 
out their responsibilities of administration and enforcement (Skidmore 
v. Swift, 323 U.S. 134). In order that these positions may be made known 
to persons who may be affected by them, official interpretations are 
issued by the Administrator on the advice of the Solicitor of Labor, as 
authorized by the Secretary (Reorganization Plan 6 of 1950, 64 Stat. 
1263; Gen. Order 45A, May 24, 1950, 15 FR 3290). The Supreme Court has 
recognized that such interpretations of this Act ``provide a practical 
guide to employers and employees as to how the office representing the 
public interest in its enforcement will seek to apply it'' and 
``constitute a body of experience and informed judgment to which courts 
and litigants may properly resort for guidance.'' Further, as stated by 
the Court: ``Good administration of the Act and good judicial 
administration alike require that the standards of public enforcement 
and those for determining private rights shall be at variance only where 
justified by very good reasons.'' (Skidmore v. Swift, 323 U.S. 134.)
    (b) The interpretations of the law contained in this subpart are 
official interpretations of the Department of Labor with respect to the 
application under described circumstances of the provisions of law which 
they discuss. The interpretations indicate, with respect to the methods 
of paying the compensation required by sections 6 and 7 and the 
application thereto of the provisions of section 3(m) of the Act, the 
construction of the law which the Secretary of Labor and the 
Administrator believe to be correct and which will guide them in the 
performance of their administrative duties under the Act unless and 
until they are otherwise directed by authoritative decisions of the 
courts or conclude, upon reexamination of an interpretation, that it is 
incorrect. Reliance may be placed upon the interpretations as provided 
in section 10 of the Portal-to-Portal Act (29 U.S.C. 259) so long as 
they remain effective and are not modified, amended, rescinded, or 
determined by judicial authority to be incorrect. For discussion of 
section 10 of the Portal-to-Portal Act, see part 790 of this chapter.



Sec. 531.26  Relation to other laws.

    Various Federal, State, and local legislation requires the payment 
of wages in cash; prohibits or regulates the issuance of scrip, tokens, 
credit cards, ``dope checks'' or coupons; prevents or restricts payment 
of wages in services or facilities; controls company stores and 
commissaries; outlaws ``kickbacks''; restrains assignment and 
garnishment of wages; and generally governs the calculation of wages and 
the frequency and manner of paying them. Where such legislation is 
applicable and does not contravene the requirements of the Act, nothing 
in the Act,

[[Page 166]]

the regulations, or the interpretations announced by the Administrator 
should be taken to override or nullify the provisons of of these laws.

                        How Payments May Be Made



Sec. 531.27  Payment in cash or its equivalent required.

    (a) Standing alone, sections 6 and 7 of the Act require payments of 
the prescribed wages, including overtime compensation, in cash or 
negotiable instrument payable at par. Section 3(m) provides, however, 
for the inclusion in the ``wage'' paid to any employee, under the 
conditions which it prescribes of the ``reasonable cost,'' or ``fair 
value'' as determined by the Secretary, of furnishing such employee with 
board, lodging, or other facilities. In addition, section 3(m) provides 
that a tipped employee's wages may consist in part of tips. It is 
section 3(m) which permits and governs the payment of wages in other 
than cash.
    (b) It should not be assumed that because the term ``wage'' does not 
appear in section 7, all overtime compensation must be paid in cash and 
may not be paid in board, lodging, or other facilities. There appears to 
be no evidence in either the statute or its legislative history which 
demonstrates the intention to provide one rule for the payment of the 
minimum wage and another rule for the payment of overtime compensation. 
The principles stated in paragraph (a) of this section are considered 
equally applicable to payment of the minimum hourly wage required by 
section 6 or of the wages required by the equal pay provisions of 
section 6(d), and to payment, when overtime is worked, of the 
compensation required by section 7. Thus, in determining whether he has 
met the minimum wage and overtime requirements of the Act, the employer 
may credit himself with the reasonable cost to himself of board, 
lodging, or other facilities customarily furnished by him to his 
employees when the cost of such board, lodging, or other facilities is 
not excluded from wages paid to such employees under the term of a bona 
fide collective bargaining agreement applicable to the employees. Unless 
the context clearly indicates otherwise, the term ``wage'' is used in 
this part to designate the amount due under either section 6 or section 
7 without distinction. It should be remembered, however, that the wage 
paid for a job, within the meaning of the equal pay provisions of 
section 6(d), may include remuneration for employment which is not 
included in the employee's regular rate of pay under section 7(e) of the 
act or is not allocable to compensation for hours of work required by 
the minimum wage provisions of section 6. Reference should be made to 
parts 778 and 800 of this chapter for a more detailed discussion of the 
applicable principles.
    (c) Tips may be credited or offset against the wages payable under 
the Act in certain circumstances, as discussed later in this subpart. 
See also the recordkeeping requirements contained in part 516 of this 
chapter.



Sec. 531.28  Restrictions applicable where payment is not in cash or its 
equivalent.

    It appears to have been the clear intention of Congress to protect 
the basic minimum wage and overtime compensation required to be paid to 
the employee by sections 6 and 7 of the Act from profiteering or 
manipulation by the employer in dealings with the employee. Section 3(m) 
of the Act and subpart B of this part accordingly prescribe certain 
limitations and safeguards which control the payment of wages in other 
than cash or its equivalent. (Special recordkeeping requirements must 
also be met. These are contained in part 516 of this chapter.) These 
provisions, it should be emphasized, do not prohibit payment of wages in 
facilities furnished either as additions to a stipulated wage or as 
items for which deductions from the stipulated wage will be made; they 
prohibit only the use of such a medium of payment to avoid the 
obligation imposed by sections 6 and 7.



Sec. 531.29  Board, lodging, or other facilities.

    Section 3(m) applies to both of the following situations: (a) Where 
board, lodging, or other facilities are furnished in addition to a 
stipulated wage; and (b) where charges for board, lodging, or other 
facilities are deducted

[[Page 167]]

from a stipulated wage. The use of the word ``furnishing'' and the 
legislative history of section 3(m) clearly indicate that this section 
was intended to apply to all facilities furnished by the employer as 
compensation to the employee, regardless of whether the employer 
calculates charges for such facilities as additions to or deductions 
from wages.



Sec. 531.30  ``Furnished'' to the employee.

    The reasonable cost of board, lodging, or other facilities may be 
considered as part of the wage paid an employee only where customarily 
``furnished'' to the employee. Not only must the employee receive the 
benefits of the facility for which he is charged, but it is essential 
that his acceptance of the facility be voluntary and uncoerced. See 
Williams v. Atlantic Coast Line Railroad Co. (E.D.N.C.). 1 W.H. Cases 
289.



Sec. 531.31  ``Customarily'' furnished.

    The reasonable cost of board, lodging, or other facilities may be 
considered as part of the wage paid an employee only where 
``customarily'' furnished to the employee. Where such facilities are 
``furnished'' to the employee, it will be considered a sufficient 
satisfaction of this requirement if the facilities are furnished 
regularly by the employer to his employees or if the same or similar 
facilities are customarily furnished by other employees engaged in the 
same or similar trade, business, or occupation in the same or similar 
communities. See Walling v. Alaska Pacific Consolidated Mining Co., 152 
F. (2d) 812 (C.A. 9), cert. denied, 327 U.S. 803; Southern Pacific Co. 
v. Joint Council (C.A. 9) 7 W.H. Cases 536. Facilities furnished in 
violation of any Federal, State, or local law, ordinance or prohibition 
will not be considered facilities ``customarily'' furnished.



Sec. 531.32  ``Other facilities.''

    (a) ``Other facilities,'' as used in this section, must be something 
like board or lodging. The following items have been deemed to be within 
the meaning of the term: Meals furnished at company restaurants or 
cafeterias or by hospitals, hotels, or restaurants to their employees; 
meals, dormitory rooms, and tuition furnished by a college to its 
student employees; housing furnished for dwelling purposes; general 
merchandise furnished at company stores and commissaries (including 
articles of food, clothing, and household effects); fuel (including 
coal, kerosene, firewood, and lumber slabs), electricity, water, and gas 
furnished for the noncommercial personal use of the employee; 
transportation furnished employees between their homes and work where 
the travel time does not constitute hours worked compensable under the 
Act and the transportation is not an incident of and necessary to the 
employment.
    (b) Shares of capital stock in an employer company, representing 
only a contingent proprietary right to participate in profits and losses 
or in the assets of the company at some future dissolution date, do not 
appear to be ``facilities'' within the meaning of the section.
    (c) It should also be noted that under Sec. 531.3(d)(1), the cost of 
furnishing ``facilities'' which are primarily for the benefit or 
convenience of the employer will not be recognized as reasonable and may 
not therefore be included in computing wages. Items in addition to those 
set forth in Sec. 531.3 which have been held to be primarily for the 
benefit or convenience of the employer and are not therefore to be 
considered ``facilities'' within the meaning of section 3(m) include: 
Safety caps, explosives, and miners' lamps (in the mining industry); 
electric power (used for commercial production in the interest of the 
employer); company police and guard protection; taxes and insurance on 
the employer's buildings which are not used for lodgings furnished to 
the employee; ``dues'' to chambers of commerce and other organizations 
used, for example, to repay subsidies given to the employer to locate 
his factory in a particular community; transportation charges where such 
transportation is an incident of and necessary to the employment (as in 
the case of maintenance-of-way employees of a railroad); charges for 
rental of uniforms where the nature of the business requires the 
employee to wear a uniform; medical services and hospitalization which 
the employer is bound to furnish under

[[Page 168]]

workmen's compensation acts, or similar Federal, State, or local law. On 
the other hand, meals are always regarded as primarily for the benefit 
and convenience of the employee. For a discussion of reimbursement for 
expenses such as ``supper money,'' ``travel expenses,'' etc., see 
Sec. 778.217 of this chapter.



Sec. 531.33  ``Reasonable cost''; ``fair value.''

    (a) Section 3(m) directs the Administrator to determine ``the 
reasonable cost * * * to the employer of furnishing * * * facilities'' 
to the employee, and in addition it authorizes him to determine ``the 
fair value'' of such facilities for defined classes of employees and in 
defined areas, which may be used in lieu of the actual measure of the 
cost of such facilities in ascertaining the ``wages'' paid to any 
employee. Subpart B contains three methods whereby an employer may 
ascertain whether any furnished facilities are a part of ``wages'' 
within the meaning of section 3(m): (1) An employer may calculate the 
``reasonable cost'' of facilities in accordance with the requirements 
set forth in Sec. 531.3; (2) an employer may request that a 
determination of ``reasonable cost'' be made, including a determination 
having particular application; and (3) an employer may request that a 
determination of ``fair value'' of the furnished facilities be made to 
be used in lieu of the actual measure of the cost of the furnished 
facilities in assessing the ``wages'' paid to an employee.
    (b) ``Reasonable cost,'' as determined in Sec. 531.3 ``does not 
include a profit to the employer or to any affiliated person.'' Although 
the question of affiliation is one of fact, where any of the following 
persons operate company stores or commissaries or furnish lodging or 
other facilities they will normally be deemed ``affiliated persons'' 
within the meaning of the regulations: (1) A spouse, child, parent, or 
other close relative of the employer; (2) a partner, officer, or 
employee in the employer company or firm; (3) a parent, subsidiary, or 
otherwise closely connected corporation; and (4) an agent of the 
employer.



Sec. 531.34  Payment in scrip or similar medium not authorized.

    Scrip, tokens, credit cards, ``dope checks,'' coupons, and similar 
devices are not proper mediums of payment under the Act. They are 
neither cash nor ``other facilities'' within the meaning of section 
3(m). However, the use of such devices for the purpose of conveniently 
and accurately measuring wages earned or facilities furnished during a 
single pay period is not prohibited. Piecework earnings, for example, 
may be calculated by issuing tokens (representing a fixed amount of work 
performed) to the employee, which are redeemed at the end of the pay 
period for cash. The tokens do not discharge the obligation of the 
employer to pay wages, but they may enable him to determine the amount 
of cash which is due to the employee. Similarly, board, lodging, or 
other facilities may be furnished during the pay period in exchange for 
scrip or coupons issued prior to the end of the pay period. The 
reasonable cost of furnishing such facilities may be included as part of 
the wage, since payment is being made not in scrip but in facilities 
furnished under the requirements of section 3(m). But the employer may 
not credit himself with ``unused scrip'' or ``coupons outstanding'' on 
the pay day in determining whether he has met the requirements of the 
Act because such scrip or coupons have not been redeemed for cash or 
facilities within the pay period. Similarly, the employee cannot be 
charged with the loss or destruction of scrip or tokens.



Sec. 531.35  ``Free and clear'' payment; ``kickbacks.''

    Whether in cash or in facilities, ``wages'' cannot be considered to 
have been paid by the employer and received by the employee unless they 
are paid finally and unconditionally or ``free and clear.'' The wage 
requirements of the Act will not be met where the employee ``kicks-
back'' directly or indirectly to the employer or to another person for 
the employer's benefit the whole or part of the wage delivered to the 
employee. This is true whether the ``kick-back'' is made in cash or in 
other than cash. For example, if it is a requirement of the employer 
that the

[[Page 169]]

employee must provide tools of the trade which will be used in or are 
specifically required for the performance of the employer's particular 
work, there would be a violation of the Act in any workweek when the 
cost of such tools purchased by the employee cuts into the minimum or 
overtime wages required to be paid him under the Act. See also in this 
connection, Sec. 531.32(c).

           Payment Where Additions or Deductions Are Involved



Sec. 531.36  Nonovertime workweeks.

    (a) When no overtime is worked by the employees, section 3(m) and 
this part apply only to the applicable minimum wage for all hours 
worked. To illustrate, where an employee works 40 hours a week at a cash 
wage rate of $1.60 an hour in a situation when that rate is the 
applicable minimum wage and is paid $64 in cash free and clear at the 
end of the workweek, and in addition is furnished facilities valued at 
$4, no consideration need be given to the question of whether such 
facilities meet the requirements of section 3(m) and this part, since 
the employee has received in cash the applicable minimum wage of $1.60 
an hour for all hours worked. Similarly, where an employee is employed 
at a rate of $1.80 an hour and during a particular workweek works 40 
hours for which he is paid $64 in cash, the employer having deducted $8 
from his wages for facilities furnished, whether such deduction meets 
the requirement of section 3(m) and subpart B of this part need not be 
considered, since the employee is still receiving, after the deduction 
has been made, a cash wage of $1.60 an hour. Deductions for board, 
lodging, or other facilities may be made in nonovertime workweeks even 
if they reduce the cash wage below the minimum, provided the prices 
charged do not exceed the ``reasonable cost'' of such facilities. When 
such items are furnished the employee at a profit, the deductions from 
wages in weeks in which no overtime is worked are considered to be 
illegal only to the extent that the profit reduces the wage (which 
includes the ``reasonable cost'' of the facilities) below the required 
minimum. Accordingly, in a situation when $1.60 an hour is the 
applicable minimum wage, if an employee employed at a rate of $1.65 an 
hour works 40 hours in a workweek and is paid only $54 in cash, $12 
having been deducted for facilities furnished to him, such facilities 
must be measured by the requirements of section 3(m) and this part to 
determine if the employee has received the minimum of $64 (40 hours x 
$1.60) in cash or in facilities which may be legitimately included in 
``wages'' payable under the Act. The same would be true where an 
employee is furnished the facilities in addition to a cash wage of $54 
for 40 hours of work. In either case, if the ``reasonable cost'' to the 
employer of legitimate facilities equals at least $10 the requirements 
of the Act are met. Cf. Southern Pacific Co. v. Joint Council Dining Car 
Employees, 165 F. (2d) 26 (C.A. 9).
    (b) Deductions for articles such as tools, miners' lamps, dynamite 
caps, and other items which do not constitute ``board, lodging, or other 
facilities'' may likewise be made in nonovertime workweeks if the 
employee nevertheless received the required minimum wage in cash free 
and clear; but to the extent that they reduce the wages of the employee 
in any such workweek below the minimum required by the Act, they are 
illegal.



Sec. 531.37  Overtime workweeks.

    (a) Section 7 requires that the employee receive compensation for 
overtime hours at ``a rate of not less than one and one-half times the 
regular rate at which he is employed.'' When overtime is worked by an 
employee who receives the whole or part of his wage in facilities and it 
becomes necessary to determine the portion of his wages represented by 
facilities, all such facilities must be measured by the requirements of 
section 3(m) and subpart B of this part. It is the Administrator's 
opinion that deductions may be made, however, on the same basis in an 
overtime workweek as in nonovertime workweeks (see Sec. 531.36), if 
their purpose and effect are not to evade the overtime requirements of 
the Act or other law, providing the amount deducted does not exceed the 
amount which could be deducted if the employee had only worked the 
maximum number of

[[Page 170]]

straight-time hours during the workweek. For example, in a situation 
where $1.60 an hour is the applicable minimum wage, if an employee is 
employed at a rate of $1.65 an hour (5 cents in excess of the minimum 
wage) the maximum amount which may be deducted from his wages in a 40-
hour workweek for items such as tools, dynamite caps, miners' lamps, or 
other articles which are not ``facilities'' within the meaning of the 
Act, is 40 times 5 cents or $2 (see Sec. 531.36). Deductions in excess 
of this amount for such articles are illegal in overtime workweeks as 
well as in nonovertime workweeks. There is no limit on the amount which 
may be deducted for ``board, lodging, or other facilities'' in overtime 
workweeks (as in workweeks when no overtime is worked), provided that 
these deductions are made only for the ``reasonable cost'' of the items 
furnished. When such items are furnished at a profit, the amount of the 
profit (plus the full amount of any deductions for articles which are 
not facilities) may not exceed $2 in the example heretofore used in this 
paragraph. These principles assume a situation where bona fide 
deductions are made for particular items in accordance with the 
agreement or understanding of the parties. If the situation is solely 
one of refusal or failure to pay the full amount of wages required by 
section 7, these principles have no application. Deductions made only in 
overtime workweeks, or increases in the prices charged for articles or 
services during overtime workweeks will be scrutinized to determine 
whether they are manipulations to evade the overtime requirements of the 
Act.
    (b) Where deductions are made from the stipulated wage of an 
employee, the regular rate of pay is arrived at on the basis of the 
stipulated wage before any deductions have been made. Where board, 
lodging, or other facilities are customarily furnished as addition to a 
cash wage, the reasonable cost of the facilities to the employer must be 
considered as part of the employee's regular rate of pay. See Walling v. 
Alaska Pacific Consolidated Mining Co., 152 F. (2d) 812 (C.A. 9), cert. 
denied, 327 U.S. 803. Thus, suppose an employee employed at a cash rate 
of $2 an hour, whose maximum nonovertime workweek under section 7(a) of 
the Act is 40 hours, works 44 hours during a particular workweek. If, in 
addition, he is furnished board, lodging, or other facilities valued at 
$16, but whose ``reasonable cost'' is $11, the $11 must be added to his 
cash straight-time pay of $88 ($2 x 44 hours) in determining the regular 
rate of pay on which his overtime compensation is to be calculated. The 
regular rate then becomes $2.25 an hour (($88+$11=$99)/(44 hours)=$2.25 
an hour). The employee is thus entitled to receive a total of $103.50 
for the week ((40 hours x $2.25=$90)+(4 hours x $3.37 \1/2\ =$13.50)). 
In addition to the straight-time pay of $88 in cash and $11 in 
facilities, extra compensation of $4.50 in cash for the 4 overtime hours 
must, therefore, be paid by the employer, to meet the requirements of 
the Act.

              Payments Made to Persons Other Than Employees



Sec. 531.38  Amounts deducted for taxes.

    Taxes which are assessed against the employee and which are 
collected by the employer and forwarded to the appropriate governmental 
agency may be included as ``wages'' although they do not technically 
constitute ``board, lodging, or other facilities'' within the meaning of 
section 3(m). This principle is applicable to the employee's share of 
social security and State unemployment insurance taxes, as well as other 
Federal, State, or local taxes, levies, and assessments. No deduction 
may be made for any tax or share of a tax which the law requires to be 
borne by the employer.



Sec. 531.39  Payments to third persons pursuant to court order.

    (a) Where an employer is legally obliged, as by order of a court of 
competent and appropriate jurisdiction, to pay a sum for the benefit or 
credit of the employee to a creditor of the employee, trustee, or other 
third party, under garnishment, wage attachment, trustee process, or 
bankruptcy proceeding, deduction from wages of the actual sum so paid is 
not prohibited: Provided, That neither the employer nor any person 
acting in his behalf or interest derives any profit or benefit

[[Page 171]]

from the transaction. In such case, payment to the third person for the 
benefit and credit of the employee will be considered equivalent, for 
the purposes of the Act, to payment to the employee.
    (b) The amount of any individual's earnings withheld by means of any 
legal or equitable procedure for the payment of any debt may not exceed 
the restriction imposed by section 303(a), title III, Restriction on 
Garnishment, of the Consumer Credit Protection Act (82 Stat. 163, 164; 
15 U.S.C. 1671 et seq.). The application of title III is discussed in 
part 870 of this chapter. When the payment to a third person of moneys 
withheld pursuant to a court order under which the withholdings exceeds 
that permitted by the CCPA, the excess will not be considered equivalent 
to payment of wages to the employee for purpose of the Fair Labor 
Standards Act.

[35 FR 10757, July 2, 1970]



Sec. 531.40  Payments to employee's assignee.

    (a) Where an employer is directed by a voluntary assignment or order 
of his employee to pay a sum for the benefit of the employee to a 
creditor, donee, or other third party, deduction from wages of the 
actual sum so paid is not prohibited: Provided, That neither the 
employer nor any person acting in his behalf or interest, directly or 
indirectly, derives any profit or benefit from the transaction. In such 
case, payment to the third person for the benefit and credit of the 
employee will be considered equivalent, for purposes of the Act, to 
payment to the employee.
    (b) No payment by the employer to a third party will be recognized 
as a valid payment of compensation required under the Act where it 
appears that such payment was part of a plan or arrangement to evade or 
circumvent the requirements of section 3(m) or subpart B of this part. 
For the protection of both employer and employee it is suggested that 
full and adequate record of all assignments and orders be kept and 
preserved and that provisions of the applicable State law with respect 
to signing, sealing, witnessing, and delivery be observed.
    (c) Under the principles stated in paragraphs (a) and (b) of this 
section, employers have been permitted to treat as payments to employees 
for purposes of the Act sums paid at the employees' direction to third 
persons for the following purposes: Sums paid, as authorized by the 
employee, for the purchase in his behalf of U.S. savings stamps or U.S. 
savings bonds; union dues paid pursuant to a collective bargaining 
agreement with bona fide representatives of the employees and as 
permitted by law; employees' store accounts with merchants wholly 
independent of the employer; insurance premiums (paid to independent 
insurance companies where the employer is under no obligation to supply 
the insurance and derives, directly or indirectly, no benefit or profit 
from it); voluntary contributions to churches and charitable, fraternal, 
athletic, and social organizations, or societies from which the employer 
receives no profit or benefit directly or indirectly.

                  Payment of Wages to Tipped Employees



Sec. 531.50  Statutory provisions with respect to tipped employees.

    (a) With respect to tipped employees, section 3(m) provides:

In determining the wage of a tipped employee, the amount paid such 
employee by his employer shall be deemed to be increased on account of 
tips by an amount determined by the employer, but not by an amount in 
excess of 50 per centum of the applicable minimum wage rate, except that 
in the case of an employee who (either himself or acting through his 
representative) shows to the satisfaction of the Secretary that the 
actual amount of tips received by him was less than the amount 
determined by the employer as the amount by which the wage paid him was 
deemed to be increased under this sentence, the amount paid such 
employee by his employer shall be deemed to have been increased by such 
lesser amount.

    (b) ``Tipped employee'' is defined in section 3(t) of the Act as 
follows:

Tipped employee means any employee engaged in an occupation in which he 
customarily and regularly receives more than $20 a month in tips.

[[Page 172]]



Sec. 531.51  Conditions for taking tip credits in making wage payments.

    The wage credit permitted on account of tips under section 3(m) may 
be taken only with respect to wage payments made under the Act to those 
employees whose occupations in the workweeks for which such payments are 
made are those of ``tipped employees'' as defined in section 3(t). Under 
section 3(t), the occupation of the employee must be one ``in which he 
customarily and regularly receives more than $20 a month in tips.'' To 
determine whether a tip credit may be taken in paying wages to a 
particular employee it is necessary to know what payments constitute 
``tips,'' whether the employee receives ``more than $20 a month'' in 
such payments in the occupation in which he is engaged, and whether in 
such occupation he receives these payments in such amount ``customarily 
and regularly.'' The principles applicable to a resolution of these 
questions are discussed in the following sections.



Sec. 531.52  General characteristics of ``tips.''

    A tip is a sum presented by a customer as a gift or gratuity in 
recognition of some service performed for him. It is to be distinguished 
from payment of a charge, if any, made for the service. Whether a tip is 
to be given, and its amount, are matters determined solely by the 
customer, and generally he has the right to determine who shall be the 
recipient of his gratuity. In the absence of an agreement to the 
contrary between the recipient and a third party, a tip becomes the 
property of the person in recognition of whose service it is presented 
by the customer. Only tips actually received by an employee as money 
belonging to him which he may use as he chooses free of any control by 
the employer, may be counted in determining whether he is a ``tipped 
employee'' within the meaning of the Act and in applying the provisions 
of section 3(m) which govern wage credits for tips.



Sec. 531.53  Payments which constitute tips.

    In addition to cash sums presented by customers which an employee 
keeps as his own, tips received by an employee include, within the 
meaning of the Act, amounts paid by bank check or other negotiable 
instrument payble at par and amounts transferred by the employer to the 
employee pursuant to directions from credit customers who designate 
amounts to be added to their bills as tips. Special gifts in forms other 
than money or its equivalent as above described such as theater tickets, 
passes, or merchandise, are not counted as tips received by the employee 
for purposes of the Act.



Sec. 531.54  Tip pooling.

    Where employees practice tip splitting, as where waiters give a 
portion of their tips to the busboys, both the amounts retained by the 
waiters and those given the busboys are considered tips of the 
individuals who retain them, in applying the provisions of section 3(m) 
and 3(t). Similarly, where an accounting is made to an employer for his 
information only or in furtherance of a pooling arrangement whereby the 
employer redistributes the tips to the employees upon some basis to 
which they have mutually agreed among themselves, the amounts received 
and retained by each individual as his own are counted as his tips for 
purposes of the Act.



Sec. 531.55  Examples of amounts not received as tips.

    (a) A compulsory charge for service, such as 10 percent of the 
amount of the bill, imposed on a customer by an employer's 
establishment, is not a tip and, even if distributed by the employer to 
his employees, cannot be counted as a tip received in applying the 
provisions of section 3(m) and 3(t). Similarly, where negotiations 
between a hotel and a customer for banquet facilities include amounts 
for distribution to employees of the hotel, the amounts so distributed 
are not counted as tips received. Likewise, where the employment 
agreement is such that amounts presented by customers as tips belong to 
the employer and must be credited or turned over to him, the employee is 
in effect collecting for his employer additional income from the 
operations of the latter's establishment. Even though such amounts are 
not collected by imposition of any

[[Page 173]]

compulsory charge on the customer, plainly the employee is not receiving 
tips within the meaning of section 3(m) and 3(t). The amounts received 
from customers are the employer's property, not his, and do not 
constitute tip income to the employee.
    (b) As stated above, service charges and other similar sums which 
become part of the employer's gross receipts are not tips for the 
purposes of the Act. However, where such sums are distributed by the 
employer to his employees, they may be used in their entirety to satisfy 
the monetary requirements of the Act. Also, if pursuant to an employment 
agreement the tips received by an employee must be credited or turned 
over to the employer, such sums may, after receipt by the employer, be 
used by the employer to satisfy the monetary requirements of the Act. In 
such instances, there is no applicability of the 50-percent limitation 
on tip credits provided by section 3(m).



Sec. 531.56  ``More than $20 a month in tips.''

    (a) In general. An employee who receives tips, within the meaning of 
the Act, is a ``tipped employee'' under the definition in section 3(t) 
when, in the occupation in which he is engaged, the amounts he receives 
as tips customarily and regularly total ``more than $20 a month.'' An 
employee employed in an occupation in which the tips he receives meet 
this minimum standard is a ``tipped employee'' for whom the wage credit 
provided by section 3(m) may be taken in computing the compensation due 
him under the Act for employment in such occupation, whether he is 
employed in it full time or part time. An employee employed full time or 
part time in an occupation in which he does not receive more than $20 a 
month in tips customarily and regularly is not a ``tipped employee'' 
within the meaning of the Act and must receive the full compensation 
required by its provisions in cash or allowable facilities without any 
deduction for tips received under the provisions of section 3(m).
    (b) Month. The definition of tipped employee does not require that 
the calendar month be used in determining whether more than $20 a month 
is customarily and regularly received as tips. Any appropriate recurring 
monthly period beginning on the same day of the calendar month may be 
used.
    (c) Individual tip receipts are controlling. An employee must 
himself customarily and regularly receive more than $20 a month in tips 
in order to qualify as a tipped employee. The fact that he is part of a 
group which has a record of receiving more than $20 a month in tips will 
not qualify him. For example, a waitress who is newly hired will not be 
considered a tipped employee merely because the other waitresses in the 
establishment receive tips in the requisite amount. For the method of 
applying the test in initial and terminal months of employment, see 
Sec. 531.58.
    (d) Significance of minimum monthly tip receipts. More than $20 a 
month in tips customarily and regularly received by the employee is a 
minimum standard that must be met before any wage credit for tips is 
determined under section 3(m). It does not govern or limit the 
determination by the employer or the Secretary of Labor of the 
appropriate amount (up to 50 percent of the minimum wage) of wage credit 
under section 3(m) that may be taken for tips.
    (e) Dual jobs. In some situations an employee is employed in a dual 
job, as for example, where a maintenance man in a hotel also serves as a 
waiter. In such a situation the employee, if he customarily and 
regularly receives at least $20 a month in tips for his work as a 
waiter, is a tipped employee only with respect to his employment as a 
waiter. He is employed in two occupations, and no tip credit can be 
taken for his hours of employment in his occupation of maintenance man. 
Such a situation is distinguishable from that of a waitress who spends 
part of her time cleaning and setting tables, toasting bread, making 
coffee and occasionally washing dishes or glasses. It is likewise 
distinguishable from the counterman who also prepares his own short 
orders or who, as part of a group of countermen, takes a turn as a short 
order cook for the group. Such related duties in an occupation that is a 
tipped occupation need not by themselves be directed toward producing 
tips.

[[Page 174]]



Sec. 531.57  Receiving the minimum amount ``customarily and regularly.''

    The employee must receive more than $20 a month in tips 
``customarily and regularly'' in the occupation in which he is engaged 
in order to qualify as a tipped employee under section 3(t). If it is 
known that he always receives more than the stipulated amount each 
month, as may be the case with many employees in occupations such as 
those of waiters, bellhops, taxicab drivers, barbers, or beauty 
operators, the employee will qualify and the tip credit provisions of 
section 3(m) may be applied. On the other hand, an employee who only 
occasionally or sporadically receives tips totaling more than $20 a 
month, such as at Christmas or New Years when customers may be more 
generous than usual, will not be deemed a tipped employee. The phrase 
``customarily and regularly'' signifies a frequency which must be 
greater than occasional, but which may be less than constant. If an 
employee is in an occupation in which he normally and recurrently 
receives more than $20 a month in tips, he will be considered a tipped 
employee even though occasionally because of sickness, vacation, 
seasonal fluctuations or the like, he fails to receive more than $20 in 
tips in a particular month.



Sec. 531.58  Initial and terminal months.

    An exception to the requirement that an employee, whether full-time, 
part-time, permanent or temporary, will qualify as a tipped employee 
only if he customarily and regularly receives more than $20 a month in 
tips is made in the case of initial and terminal months of employment. 
In such months the purpose of the provision for tipped employees would 
seem fulfilled if qualification as a tipped employee is based on his 
receipt of tips in the particular week or weeks of such month at a rate 
in excess of $20 a month, where the employee has worked less than a 
month because he started or terminated employment during the month.



Sec. 531.59  The tip wage credit.

    In determining compliance with the wage payment requirements of the 
Act, under the provisions of section 3(m) the amount paid to a tipped 
employee by an employer is deemed to be increased on account of tips by 
an amount which cannot exceed 50 percent of the minimum wage applicable 
to such employee in the workweek for which the wage payment is made. 
This credit is in addition to any credit for board, lodging, or other 
facilities which may be allowable under section 3(m). The credit allowed 
on account of tips may be less than 50 percent of the applicable minimum 
wage; it cannot be more. The actual amount is left by the statute to 
determination by the employer on the basis of his information concerning 
the tipping practices and receipts in his establishment. However, 
section 3(m) provides that an employee who can show to the satisfaction 
of the Secretary of Labor that the actual amount of tips received by him 
was less than the amount determined by the employer as a tip credit 
shall receive an appropriate wage adjustment. See Sec. 531.50(a). As 
stated in Senate Report No. 1487 (89th Cong. 2d sess.), it is presumed 
that in the application of this special provision the employee will be 
receiving at least the maximum tip credit in actual tips: ``If the 
employee is receiving less than the amount credited, the employer is 
required to pay the balance so that the employee receives at least the 
minimum wage with the defined combination of wages and tips.'' Provision 
is made in Sec. 531.7 for employee requests for review of tip credit 
determinations made by employers, in the event that the employee 
considers that the tip credit taken exceeds his actual tips. As 
indicated in Sec. 531.51, the tip credit may be taken only for hours 
worked by the employee in an occupation in which he qualifies as a 
``tipped employee.'' Under employment agreements requiring tips to be 
turned over or credited to the employer to be treated by him as part of 
his gross receipts, it is clear from the legislative history that the 
employer must pay the employee the full minimum hourly wage, since for 
all practical purposes the employee is not receiving tip income. See 
also Sec. 531.54.



Sec. 531.60  Overtime payments.

    (a) When overtime is worked by a tipped employee who is subject to 
the

[[Page 175]]

overtime pay provisions of the Act, his regular rate of pay is 
determined by dividing hs total remuneration for employment (except 
statutory exclusions) in any workweek by the total number of hours 
actually worked by him in that workweek for which such compensation was 
paid. (See part 778 of this chapter for a detailed discussion of 
overtime compensation under the Act.) In accordance with section 3(m), a 
tipped employee's regular rate of pay includes the amount of tip credit 
taken by the employer (not in excess of 50 percent of the applicable 
minimum wage), the reasonable cost or fair value of any facilities 
furnished him by the employer, as authorized under section 3(m) and this 
part 531, and the cash wages including commissions and certain bonuses 
paid by the employer. Any tips received by the employee in excess of the 
tip credit need not be included in the regular rate. Such tips are not 
payments made by the employer to the employee as remuneration for 
employment within the meaning of the Act.



PART 536--AREA OF PRODUCTION--Table of Contents




Sec.
536.1  ``Area of production'' as used in section 7(c) of the Fair Labor 
          Standards Act.
536.2  ``Area of production'' as used in section 13(a)(10) of the Fair 
          Labor Standards Act.
536.3  ``Area of production'' as used in section 13(a)(17) of the Fair 
          Labor Standards Act.
536.4  Petition for amendment of regulations.

    Authority: 52 Stat. 1060; 29 U.S.C. 201 et seq, unless otherwise 
noted.

    Source: 27 FR 400, Jan. 13, 1962, unless otherwise noted.



Sec. 536.1  ``Area of production'' as used in section 7(c) of the Fair 
Labor Standards Act.

    (a) An employer shall be regarded as engaged in the first processing 
of any agricultural or horticultural commodity during seasonal 
operations within the ``area of production'' within the meaning of 
section 7(c) of the Fair Labor Standards Act if he is so engaged in an 
establishment which is located in the open country or in a rural 
community and in which such first processing is performed on commodities 
95 percent of which come from normal rural sources of supply located not 
more than the following airline distances from the establishment:
    (1) With respect to grain, soybeans, eggs, or tobacco--50 miles;
    (2) With respect to any other agricultural or horticultural 
commodities--20 miles.
    (b) For the purpose of this section:
    (1) ``Open the country or rural community'' shall not include any 
city, town, or urban place of 2,500 or greater population or any area 
within:
    (i) One air-line mile of any city, town, or urban place with a 
population of 2,500 up to but not including 50,000, or
    (ii) Three air-line miles of any city, town, or urban place with a 
population of 50,000 up to but not including 500,000, or
    (iii) Five air-line miles of any city with a population of 500,000 
or greater, according to the latest available United States Census.
    (2) The commodities shall be considered to come from ``normal rural 
sources of supply'' within the specified distances from the 
establishment if they are received: (i) From farms within such specified 
distances, or (ii) from farm assemblers or other establishments through 
which the commodity customarily moves, which are within such specified 
distances and located in the open country or in a rural community, or 
(iii) from farm assemblers or other establishments not located in the 
open country or in a rural community provided it can be demonstrated 
that the commodities were produced on farms within such specified 
distances.
    (3) The period for determining whether 95 percent of the 
agricultural or horticultural commodities are received from normal rural 
sources of supply shall be the last preceding calendar month in which 
operations were carried on for two workweeks or more, except that until 
such time as an establishment has operated for such a calendar month the 
period shall be the time during which it has been in operation.
    (4) The percentage of commodities received from normal rural sources 
of supply within the specified distances

[[Page 176]]

shall be determined by weight, volume or other physical unit of measure, 
except that dollar value shall be used if different commodities received 
in the establishment are customarily measured in physical units that are 
not comparable.

(Sec. 7(c), 52 Stat. 1063, 29 U.S.C. 207 (c))



Sec. 536.2  ``Area of production'' as used in section 13(a)(10) of the Fair 
Labor Standards Act.

    (a) An individual shall be regarded as employed within the ``area of 
production'' within the meaning of section 13(a) (10) of the Fair Labor 
Standards Act in handling, packing, storing, compressing, pasteurizing, 
drying, preparing in their raw or natural state, or canning of 
agricultural or horticultural commodities for market, or in making 
cheese or butter or other dairy products:
    (1) If the establishment where he is employed is located in the open 
country or in a rural community and 95 percent of the commodities on 
which such operations are performed by the establishment come from 
normal rural sources of supply located not more than the following air-
line distances from the establishment:
    (i) With respect to operations on fresh fruit and vegetables--15 
miles;
    (ii) With respect to the storing of cotton and any operations on 
commodities not otherwise specified in this subparagraph--20 miles;
    (iii) With respect to the compressing and compress-warehousing of 
cotton, and operations on tobacco, grain, soybeans, poultry or eggs--50 
miles.
    (b) For the purposes of this section:
    (1) ``Open country or rural community'' shall not include any city, 
town, or urban place of 2,500 or greater population, or any area within:
    (i) One air-line mile of any city, town, or urban place with a 
population of 2,500 up to but not including 50,000, or
    (ii) Three air-line miles of any city, town, or urban place with a 
population of 50,000 up to but not including 500,000, or
    (iii) Five air-line miles of any city with a population of 500,000 
or greater, according to the latest available United States Census.
    (2) The commodities shall be considered to come from ``normal rural 
sources of supply'' within the specified distances from the 
establishment if they are received:
    (i) From farms within such specified distances, or
    (ii) From farm assemblers or other establishments through which the 
commodity customarily moves, which are within such specified distances 
and located in the open country or in a rural community, or
    (iii) From farm assemblers or other establishments not located in 
the open country or in a rural community provided it can be demonstrated 
that the commodities were produced on farms within such specified 
distances.
    (3) The period for determining whether 95 percent of the commodities 
are received from normal rural sources of supply shall be the last 
proceding calendar month in which operations were carried on for two 
workweeks or more, except that until such time as an establishment has 
operated for such a calendar month the period shall be the time during 
which it has been in operation.
    (4) The percentage of commodities received from normal rural sources 
of supply within the specified distances shall be determined by weight, 
volume or other physical unit of measure, except that dollar value shall 
be used if different commodities received in the establishment are 
customarily measured in physical units that are not comparable.

(Sec. 12(a) (10), 52 Stat. 1067, 29 U.S.C. 213(a) (10))



Sec. 536.3  ``Area of production'' as used in section 13(a)(17) of the Fair 
Labor Standards Act.

    (a) An employee employed by an establishment commonly recognized as 
a country elevator and having not more than five employees (including 
such an establishment which sells products and services used in the 
operation of a farm) shall be regarded as employed within the ``area of 
production,'' within the meaning of section 13(a)(17) of the Fair Labor 
Standards Act, if the establishment by which he is employed is located 
in the open country or in a rural community and 95 percent of the

[[Page 177]]

agricultural commodities received by the establishment for storage or 
for market come from normal rural sources of supply within the following 
air-line distances from the establishment:
    (1) With respect to grain and soybeans--50 miles;
    (2) With respect to any other agricultural commodities--20 miles.
    (b) For the purpose of this section:
    (1) ``Open country or rural community'' shall not include any city, 
town, or urban place of 2,500 or greater population or any area within:
    (i) One air-line mile of the city, town, or urban place with a 
population of 2,500 up to by not including 50,000, or
    (ii) Three air-line miles of any city, town, or urban place with a 
population of 50,000 up to but not including 500,000, or
    (iii) Five air-line miles of any city with a population of 500,000 
or greater, according to the latest available United States Census.
    (2) The commodities shall be considered to come from ``normal rural 
sources of supply'' within the specified distances from the 
establishment if they are received: (i) From farms within such specified 
distances, or (ii) from farm assemblers or other establishments through 
which the commodity customarily moves, which are within such specified 
distances and located in the open country or in a rural community, or 
(iii) from farm assemblers or other establishments not located in the 
open country or in a rural community provided it can be demonstrated 
that the commodities were produced on farms within such specified 
distances.
    (3) The period for determining whether 95 percent of the commodities 
are received from normal rural sources of supply shall be the last 
preceding calendar month in which operations were carried on for two 
workweeks or more, except that until such time as an establishment has 
operated for such a calendar month the period shall be the time during 
which it has been in operation.
    (4) The percentage of commodities received from normal rural sources 
of supply within the specified distances shall be determined by weight, 
volume or other physical unit of measure, except that dollar value shall 
be used if different commodities received in the establishment are 
customarily measured in physical units that are not comparable.

(Sec. 13(a) (17), 52 Stat. 1067, as amended, sec. 9, 75 Stat. 71; 29 
U.S.C. 213 (a) (17))



Sec. 536.4  Petition for amendment of regulations.

    Any interested person or association wishing a revision of any 
section of this part may submit in writing to the Administrator a 
petition for amendment thereof, setting forth the changes desired and 
the reasons for proposing them. If upon inspection of the petition the 
Administrator believes that reasonable cause for amendment of the 
regulations is set forth, the Administrator will either schedule a 
hearing with notice to interested parties or will make other provisions 
for affording interested parties an opportunity to present their views 
in support of or opposition to the proposed change.




 PART 541--DEFINING AND DELIMITING THE TERMS ``ANY EMPLOYEE EMPLOYED IN 
 A BONA FIDE EXECUTIVE, ADMINISTRATIVE, OR PROFESSIONAL CAPACITY (INCLUDING 
 ANY EMPLOYEE 
EMPLOYED IN THE CAPACITY OF ACADEMIC ADMINISTRATIVE PERSONNEL OR TEACHER 
IN ELEMENTARY OR SECONDARY SCHOOLS), OR IN THE CAPACITY OF OUTSIDE 
SALESMAN''--Table of Contents




    Effective Date Note: The President's Memorandum of January 29, 1981 
(46 FR 11227, Feb. 6, 1981), directed Federal agencies to postpone for 
sixty days from January 29, 1981, the effective date of all regulations 
that they had promulgated in final form and had scheduled to become 
effective during such sixty day period.
    Several sections in part 541 were revised at 46 FR 3013, Jan. 13, 
1981, and the effective date subsequently postponed. For further 
explanation, see the notes following the text of affected sections in 
this part.

                     Subpart A--General Regulations

Sec.
541.0  Terms used in regulations.
541.1  Executive.

[[Page 178]]

541.2  Administrative.
541.3  Professional.
541.5  Outside salesman.
541.5a  Special provision for motion picture producing industry.
541.5b  Equal pay provisions of section 6(d) of the act apply to 
          executive, administrative, and professional employees, and to 
          outside salesmen.
541.5d  Special provisions applicable to employees of public agencies.
541.6  Petition for amendment of regulations.
541.52  Special provision for motion picture producing industry.

                       Subpart B--Interpretations

541.99  Introductory statement.

           Employee Employed in a Bona Fide Executive Capacity

541.101  General.
541.102  Management.
541.103  Primary duty.
541.104  Department or subdivision.
541.105  Two or more other employees.
541.106  Authority to hire or fire.
541.107  Discretionary powers.
541.108  Work directly and closely related.
541.109  Emergencies.
541.110  Occasional tasks.
541.111  Nonexempt work generally.
541.112  Percentage limitations on nonexempt work.
541.113  Sole-charge exception.
541.114  Exception for owners of 20-percent interest.
541.115  Working foremen.
541.116  Trainees, executive.
541.117  Amount of salary required.
541.118  Salary basis.
541.119  Special proviso for high salaried executives.

        Employee Employed in a Bona Fide Administrative Capacity

541.201  Types of administrative employees.
541.202  Categories of work.
541.203  Nonmanual work.
541.205  Directly related to management policies or general business 
          operations.
541.206  Primary duty.
541.207  Discretion and independent judgment.
541.208  Directly and closely related.
541.209  Percentage limitations on nonexempt work.
541.210  Trainees, administrative.
541.211  Amount of salary or fees required.
541.212  Salary basis.
541.213  Fee basis.
541.214  Special proviso for high salaried administrative employees.
541.215  Elementary or secondary schools and other educational 
          establishments and institutions.

         Employee Employed in a Bona Fide Professional Capacity

541.300  General.
541.301  Learned professions.
541.302  Artistic professions.
541.303  Computer related occupations under Public Law 101-583.
541.304  Primary duty.
541.305  Discretion and judgment.
541.306  Predominantly intellectual and varied.
541.307  Essential part of and necessarily incident to.
541.308  Nonexempt work generally.
541.309  20-percent nonexempt work limitation.
541.310  Trainees, professional.
541.311  Amount of salary or fees required.
541.312  Salary basis.
541.313  Fee basis.
541.314  Exception for physicians, lawyers, and teachers.
541.315  Special proviso for high salaried professional employees.

          Employee Employed in the Capacity of Outside Salesman

541.500  Definition of ``outside salesman.''
541.501  Making sales or obtaining orders.
541.502  Away from his employer's place of business.
541.503  Incidental to and in conjunction with sales work.
541.504  Promotion work.
541.505  Driver salesmen.
541.506  Nonexempt work generally.
541.507  20-percent limitation on nonexempt work.
541.508  Trainees, outside salesmen.

                            Special Problems

541.600  Combination exemptions.
541.601  Special provision for motion picture producing industry.
541.602  Special proviso concerning executive and administative 
          employees in multi-store retailing operations.

Appendix to Part 541--Occupational Index

    Authority: 29 U.S.C. 213; Pub. L. 101-583, 104 Stat. 2871; 
Reorganization Plan No. 6 of 1950 (3 CFR, 1945-53 Comp., p. 1004); 
Secretary's Order No. 13-71 (36 FR 8755).

    Source: 38 FR 11390, May 7, 1973, unless otherwise noted.



                     Subpart A--General Regulations



Sec. 541.0  Terms used in regulations.

    (a) Administrator means the Administrator of the Wage and Hour 
Division, U.S. Department of Labor. The Secretary of Labor has delegated 
to the Administrator the functions vested in

[[Page 179]]

him under section 13(a)(1) of the Fair Labor Standards Act.
    (b) Act means the Fair Labor Standards Act of 1938, as amended.



Sec. 541.1  Executive.

    The term employee employed in a bona fide executive * * * capacity 
in section 13(a) (1) of the Act shall mean any employee:
    (a) Whose primary duty consists of the management of the enterprise 
in which he is employed or of a customarily recognized department of 
subdivision thereof; and
    (b) Who customarily and regularly directs the work of two or more 
other employees therein; and
    (c) Who has the authority to hire or fire other employees or whose 
suggestions and recommendations as to the hiring or firing and as to the 
advancement and promotion or any other change of status of other 
employees will be given particular weight; and
    (d) Who customarily and regularly exercises discretionary powers; 
and
    (e) Who does not devote more than 20 percent, or, in the case of an 
employee of a retail or service establishment who does not devote as 
much as 40 percent, of his hours of work in the workweek to activities 
which are not directly and closely related to the performance of the 
work described in paragraphs (a) through (d) of this section: Provided, 
That this paragraph shall not apply in the case of an employee who is in 
sole charge of an independent establishment or a physically separated 
branch establishment, or who owns at least a 20-percent interest in the 
enterprise in which he is employed; and
    (f) Who is compensated for his services on a salary basis at a rate 
of not less than $155 per week (or $130 per week, if employed by other 
than the Federal Government in Puerto Rico, the Virgin Islands, or 
American Samoa), exclusive of board, lodging, or other facilities: 
Provided, That an employee who is compensated on a salary basis at a 
rate of not less than $250 per week (or $200 per week, if employed by 
other than the Federal Government in Puerto Rico, the Virgin Islands or 
American Samoa), exclusive of board, lodging, or other facilities, and 
whose primary duty consists of the management of the enterprise in which 
the employee is employed or of a customarily recognized department or 
subdivision thereof, and includes the customary and regular direction of 
the work of two or more other employees therein, shall be deemed to meet 
all the requirements of this section.

[38 FR 11390, May 7, 1973, as amended at 40 FR 7092, Feb. 19, 1975]

    Effective Date Note: Paragraph (f) in Sec. 541.1 was revised at 46 
FR 3013, Jan. 13, 1981. In accordance with the President's Memorandum of 
January 29, 1981 (46 FR 11227, Feb. 6, 1981), the effective date was 
postponed indefinitely at 46 FR 11972, Feb. 12, 1981.
    The text of paragraph (f) set forth above remains in effect pending 
further action by the issuing agency. The text of the postponed 
regulation appears below.

Sec. 541.1  Executive.

                                * * * * *

    (f) Who is compensated for his services on a salary basis at a rate 
of not less than $225 per week beginning February 13, 1981 and $250 per 
week beginning February 13, 1983 (or $180 per week beginning February 
13, 1981 and $200 per week beginning February 13, 1983. If employed by 
other than the Federal Government in Puerto Rico, the Virgin Islands, or 
American Samoa), exclusive of board, lodging, or other facilities: 
Provided, That an employee who is compensated on a salary basis at a 
rate of not less than $320 per week beginning February 13, 1981 and $345 
per week beginning February 13, 1983 (or $260 per week beginning 
February 13, 1981 and $285 per week beginning February 13, 1983, if 
employed by other than the Federal Government in Puerto Rico, the Virgin 
Islands or American Samoa), exclusive of board, lodging, or other 
facilities, and whose primary duty consists of the management of the 
enterprise in which the employee is employed or of a customarily 
recognized department or subdivision thereof, and includes the customary 
and regular direction of the work of two or more other employees 
therein, shall be deemed to meet all the requirements of this section.



Sec. 541.2  Administrative.

    The term employee employed in a bona fide * * * administrative * * * 
capacity in section 13(a)(1) of the Act shall mean any employee:
    (a) Whose primary duty consists of either:
    (1) The performance of office or nonmanual work directly related to 
management policies or general business

[[Page 180]]

operations of his employer or his employer's customers, or
    (2) The performance of functions in the administration of a school 
system, or educational establishment or institution, or of a department 
or subdivision thereof, in work directly related to the academic 
instruction or training carried on therein; and
    (b) Who customarily and regularly exercises discretion and 
independent judgment; and
    (c)(1) Who regularly and directly assists a proprietor, or an 
employee employed in a bona fide executive or administrative capacity 
(as such terms are defined in the regulations of this subpart), or
    (2) Who performs under only general supervision work along 
specialized or technical lines requiring special training, experience, 
or knowledge, or
    (3) Who executes under only general supervision special assignments 
and tasks; and
    (d) Who does not devote more than 20 percent, or, in the case of an 
employee of a retail or service establishment who does not devote as 
much as 40 percent, of his hours worked in the workweek to activities 
which are not directly and closely related to the performance of the 
work described in paragraphs (a) through (c) of this section; and
    (e)(1) Who is compensated for his services on a salary or fee basis 
at a rate of not less than $155 per week ($130 per week, if employed by 
other than the Federal Government in Puerto Rico, the Virgin Islands, or 
American Samoa), exclusive of board, lodging, or other facilities, or
    (2) Who, in the case of academic administrative personnel, is 
compensated for services as required by paragraph (e)(1) of this 
section, or on a salary basis which is at least equal to the entrance 
salary for teachers in the school system, educational establishment, or 
institution by which employed: Provided, That an employee who is 
compensated on a salary or fee basis at a rate of not less than $250 per 
week ($200 per week if employed by other than the Federal Government in 
Puerto Rico, the Virgin Islands, or American Samoa), exclusive of board, 
lodging, or other facilities, and whose primary duty consists of the 
performance of work described in paragraph (a) of this section, which 
includes work requiring the exercise of discretion and independent 
judgment, shall be deemed to meet all the requirements of this section.

[38 FR 11390, May 7, 1973, as amended at 40 FR 7092, Feb. 19, 1975]

    Effective Date Note: Paragraph (e) in Sec. 541.2 was revised at 46 
FR 3013, Jan. 13, 1981. In accordance with the President's Memorandum of 
January 29, 1981 (46 FR 11227, Feb. 6, 1981), the effective date was 
postponed indefinitely at 46 FR 11972, Feb. 12, 1981.
    The text of paragraph (e) set forth above remains in effect pending 
further action by the issuing agency. The text of the postponed 
regulation appears below.

Sec. 541.2  Administrative.

                                * * * * *

    (e)(1) Who is compensated for his services on a salary or fee basis 
at a rate of not less than $225 per week beginning February 13, 1981 and 
$250 per week beginning February 13, 1983 ($180 per week beginning 
February 13, 1981 and $200 per week beginning February 13, 1983, if 
employed by other than the Federal Government in Puerto Rico, the Virgin 
Islands, or American Samoa), exclusive of board, lodging, or other 
facilities, or
    (2) Who, in the case of academic administrative personnel, is 
compensated for services as required by paragraph (e)(1) of this 
section, or on a salary basis which is at least equal to the entrance 
salary for teachers in the school system, educational establishment, or 
institution by which employed: Provided, That an employee who is 
compensated on a salary or fee basis at a rate of not less than $320 per 
week beginning February 13, 1981 and $345 per week beginning February 
13, 1983 ($260 per week beginning February 13, 1981 and $285 per week 
beginning February 13, 1983, if employed by other than the Federal 
Government in Puerto Rico, the Virgin Islands, or American Samoa), 
exclusive of board, lodging, or other facilities, and whose primary duty 
consists of the performance of work described in paragraph (a) of this 
section, which includes work requiring the exercise of discretion and 
independent judgment, shall be deemed to meet all the requirements of 
this section.



Sec. 541.3  Professional.

    The term employee employed in a bona fide * * * professional 
capacity in section 13(a)(1) of the Act shall mean any employee:
    (a) Whose primary duty consists of the performance of:

[[Page 181]]

    (1) Work requiring knowledge of an advance type in a field of 
science or learning customarily acquired by a prolonged course of 
specialized intellectual instruction and study, as distinguished from a 
general academic education and from an apprenticeship, and from training 
in the performance of routine mental, manual, or physical processes, or
    (2) Work that is original and creative in character in a recognized 
field of artistic endeavor (as opposed to work which can be produced by 
a person endowed with general manual or intellectual ability and 
training), and the result of which depends primarily on the invention, 
imagination, or talent of the employee, or
    (3) Teaching, tutoring, instructing, or lecturing in the activity of 
imparting knowledge and who is employed and engaged in this activity as 
a teacher in the school system or educational establishment or 
institution by which he is employed, or
    (4) Work that requires theoretical and practical application of 
highly-specialized knowledge in computer systems analysis, programming, 
and software engineering, and who is employed and engaged in these 
activities as a computer systems analyst, computer programmer, software 
engineer, or other similarly skilled worker in the computer software 
field, as provided in Sec. 541.303; and
    (b) Whose work requires the consistent exercise of discretion and 
judgment in its performance; and
    (c) Whose work is predominantly intellectual and varied in character 
(as opposed to routine mental, manual, mechanical, or physical work) and 
is of such character that the output produced or the result accomplished 
cannot be standardized in relation to a given period of time; and
    (d) Who does not devote more than 20 percent of his hours worked in 
the workweek to activities which are not an essential part of and 
necessarily incident to the work described in paragraphs (a) through (c) 
of this section; and
    (e) Who is compensated for services on a salary or fee basis at a 
rate of not less than $170 per week ($150 per week, if employed by other 
than the Federal Government in Puerto Rico, the Virgin Islands, or 
American Samoa), exclusive of board, lodging, or other facilities: 
Provided, That this paragraph shall not apply in the case of an employee 
who is the holder of a valid license or certificate permitting the 
practice of law or medicine or any of their branches and who is actually 
engaged in the practice thereof, nor in the case of an employee who is 
the holder of the requisite academic degree for the general practice of 
medicine and is engaged in an internship or resident program pursuant to 
the practice of medicine or any of its branches, nor in the case of an 
employee employed and engaged as a teacher as provided in paragraph 
(a)(3) of this section: Provided further, That an employee who is 
compensated on a salary or fee basis at a rate of not less than $250 per 
week (or $200 per week, if employed by other than the Federal Government 
in Puerto Rico, the Virgin Islands, or American Samoa), exclusive of 
board, lodging, or other facilities, and whose primary duty consists of 
the performance either of work described in paragraph (a) (1), (3), or 
(4) of this section, which includes work requiring the consistent 
exercise of discretion and judgment, or of work requiring invention, 
imagination, or talent in a recognized field of artistic endeavor, shall 
be deemed to meet all of the requirements of this section: Provided 
further, That the salary or fee requirements of this paragraph shall not 
apply to an employee engaged in computer-related work within the scope 
of paragraph (a)(4) of this section and who is compensated on an hourly 
basis at a rate in excess of 6\1/2\ times the minimum wage provided by 
section 6 of the Act.

[38 FR 11390, May 7, 1973, as amended at 40 FR 7092, Feb. 19, 1975; 57 
FR 46744, Oct. 9, 1992]

    Effective Date Note: Paragraph (e) in Sec. 541.3 was revised at 46 
FR 3014, Jan. 13, 1981. In accordance with the President's Memorandum of 
January 29, 1981 (46 FR 11227, Feb. 6, 1981), the effective date was 
postponed indefinitely at 46 FR 11972, Feb. 12, 1981.
    The text of paragraph (e) set forth above remains in effect pending 
further action by the issuing agency. The text of the postponed 
regulation appears below.

[[Page 182]]

Sec. 541.3  Professional.

                                * * * * *

    (e) Who is compensated for services on a salary or fee basis at a 
rate of not less than $250 per week beginning February 13, 1981 and $280 
per week beginning February 13, 1983 ($225 per week beginning February 
13, 1981 and $250 per week beginning February 13, 1983 if employed by 
other than the Federal Government in Puerto Rico, the Virgin Islands, or 
American Samoa), exclusive of board, lodging, or other facilities: 
Provided, That this paragraph shall not apply in the case of an employee 
who is the holder of a valid license or certificate permitting the 
practice of law or medicine or any of their branches and who is actually 
engaged in the practice thereof, nor in the case of an employee who is 
the holder of the requisite academic degree for the general practice of 
medicine and is engaged in an internship or resident program pursuant to 
the practice of medicine or any of its branches, nor in the case of an 
employee employed and engaged as a teacher as provided in paragraph 
(a)(3) of this section: Provided further, That an employee who is 
compensated on a salary or fee basis at a rate of not less than $320 per 
week beginning February 13, 1981 and $345 per week beginning February 
13, 1983 (or $260 per week beginning February 13, 1981 and $285 per week 
beginning February 13, 1983 if employed by other than the Federal 
Government in Puerto Rico, the Virgin Islands, or American Samoa), 
exclusive of board, lodging, or other facilities, and whose primary duty 
consists of the performance either of work described in paragraph (a) 
(1) or (3) of this section, which includes work requiring the consistent 
exercise of discretion and judgment, or of work requiring invention, 
imagination, or talent in a recognized field of artistic endeavor, shall 
be deemed to meet all of the requirements of this section.



Sec. 541.5  Outside salesman.

    The term employee employed * * * in the capacity of outside salesman 
in section 13(a)(1) of the Act shall mean any employee:
    (a) Who is employed for the purpose of and who is customarily and 
regularly engaged away from his employer's place or places of business 
in:
    (1) Making sales within the meaning of section 3(k) of the Act, or
    (2) Obtaining orders or contracts for services or for the use of 
facilities for which a consideration will be paid by the client or 
customer; and
    (b) Whose hours of work of a nature other than that described in 
paragraph (a)(1) or (2) of this section do not exceed 20 percent of the 
hours worked in the workweek by nonexempt employees of the employer: 
Provided, That work performed incidental to and in conjunction with the 
employee's own outside sales or solicitations, including incidental 
deliveries and collections, shall not be regarded as nonexempt work.



Sec. 541.5a  Special provision for motion picture producing industry.

    The requirement of Secs. 541.1, 541.2, and 541.3 that the employee 
be paid ``on a salary basis'' shall not apply to an employee in the 
motion picture producing industry who is compensated at a base rate of 
at least $200 a week (exclusive of board, lodging, or other facilities).

    Effective Date Note: Section 541.5a was revised at 46 FR 3014, Jan. 
13, 1981. In accordance with the President's Memorandum of January 29, 
1981 (46 FR 11227, Feb. 6, 1981), the effective date was postponed 
indefinitely at 46 FR 11972, Feb. 12, 1981.
    The text of Sec. 541.5a set forth above remains in effect pending 
further action by the issuing agency. The text of the postponed 
regulation appears below.

Sec. 541.5a  Special provision for motion picture producing industry.

    The requirement of Secs. 541.1, 541.2, and 541.3 that the employee 
be paid ``on a salary basis'' shall not apply to an employee in the 
motion picture producing industry who is compensated at a base rate of 
at least $320 per week beginning February 13, 1981 and $345 per week 
beginning February 13, 1983 (exclusive of board, lodging, or other 
facilities).



Sec. 541.5b  Equal pay provisions of section 6(d) of the act apply to 
executive, administrative, and professional employees, and to outside 
salesmen.

    Effective July 1, 1972, the Fair Labor Standards Act was amended to 
include within the protection of the equal pay provisions those 
employees exempt from the minimum wage and overtime pay provisions as 
bona fide executive, administrative, and professional employees 
(including any employee employed in the capacity of academic 
administrative personnel or teacher in elementary or secondary schools), 
or in the capacity of outside salesmen under

[[Page 183]]

section 13(a)(1) of the act. Thus, for example, where an exempt 
administrative employee and another employee of the establishment are 
performing substantially ``equal work,'' the sex discrimination 
prohibitions of section 6(d) are applicable with respect to any wage 
differential between those two employees.



Sec. 541.5d  Special provisions applicable to employees of public agencies.

    (a) An employee of a public agency who otherwise meets the 
requirements of Sec. 541.118 shall not be disqualified from exemption 
under Secs. 541.1, 541.2, or 541.3 on the basis that such employee is 
paid according to a pay system established by statute, ordinance, or 
regulation, or by a policy or practice established pursuant to 
principles of public accountability, under which the employee accrues 
personal leave and sick leave and which requires the public agency 
employee's pay to be reduced or such employee to be placed on leave 
without pay for absences for personal reasons or because of illness or 
injury of less than one work-day when accrued leave is not used by an 
employee because--
    (1) permission for its use has not been sought or has been sought 
and denied;
    (2) accrued leave has been exhausted; or
    (3) the employee chooses to use leave without pay.
    (b) Deductions from the pay of an employee of a public agency for 
absences due to a budget-required furlough shall not disqualify the 
employee from being paid ``on a salary basis'' except in the workweek in 
which the furlough occurs and for which the employee's pay is 
accordingly reduced.

[57 FR 37677, Aug. 19, 1992]



Sec. 541.6  Petition for amendment of regulations.

    Any person wishing a revision of any of the terms of the foregoing 
regulations may submit in writing to the Administrator a petition 
setting forth the changes desired and the reasons for proposing them. 
If, upon inspection of the petition, the administrator believes that 
reasonable cause for amendment of the regulations is set forth, the 
Administrator will either schedule a hearing with due notice to 
interested parties, or will make other provision for affording 
interested parties an opportunity to present their views, either in 
support of or in opposition to the proposed changes. In determining such 
future regulations, separate treatment for different industries and for 
different classes of employees may be given consideration.



Sec. 541.52  Special provision for motion picture producing industry.

    The requirements of Secs. 541.1, 541.2, and 541.3 that the employee 
be paid ``on a salary basis'' shall not apply to an employee in the 
motion picture producing industry who is compensated at a base rate of 
at least $250 a week (exclusive of board, lodging, or other facilities).

[40 FR 7092, Feb. 19, 1975]

    Effective Date Note: Section 541.52 was removed at 46 FR 3014, Jan. 
13, 1981. In accordance with the President's Memorandum of January 29, 
1981 (46 FR 11227, Feb. 6, 1981), the effective date of the removal was 
postponed indefinitely at 46 FR 11972, Feb. 12, 1981.
    The text of Sec. 541.52 set forth above remains in effect pending 
further action by the issuing agency.



                       Subpart B--Interpretations



Sec. 541.99  Introductory statement.

    (a) Section 13(a)(1) of the Fair Labor Standards Act, as amended, 
exempts from the wage and hour provisions of the act ``any employee 
employed in a bona fide executive, administrative, or professional 
capacity (including any employee employed in the capacity of academic 
administrative personnel or teacher in elementary or secondary schools), 
or in the capacity of outside salesman (as such terms are defined and 
delimited from time to time by regulations of the Secretary, subject to 
the provisions of the Administrative Procedure Act, except that an 
employee of a retail or service establishment shall not be excluded from 
the definition of employee employed in a bona fide executive or 
administrative capacity because of the number of hours in his workweek 
which he devotes to activities not directly or closely related to the 
performance of

[[Page 184]]

executive or administrative activities, if less than 40 percent of his 
hours worked in the workweek are devoted to such activities).'' The 
requirements of the exemption under this section of the act are 
contained in subpart A of this part.

           Employee Employed in a Bona Fide Executive Capacity



Sec. 541.101  General.

    The duties and responsibilities of an exempt executive employee are 
described in paragraphs (a) through (d) of Sec. 541.1. Paragraph (e) of 
Sec. 541.1 contains among other things, percentage limitations on the 
amount of time which an employee may devote to activities ``which are 
not directly and closely related to the performance of the work 
described in paragraphs (a) through (d)'' of that section. For 
convenience in discussion, the work described in paragraphs (a) through 
(d) of Sec. 541.1 and the activities directly and closely related to 
such work will be referred to as ``exempt'' work, while other activities 
will be referred to as ``nonexempt'' work.



Sec. 541.102  Management.

    (a) In the usual situation the determination of whether a particular 
kind of work is exempt or nonexempt in nature is not difficult. In the 
vast majority of cases the bona fide executive employee performs 
managerial and supervisory functions which are easily recognized as 
within the scope of the exemption.
    (b) For example, it is generally clear that work such as the 
following is exempt work when it is performed by an employee in the 
management of his department or the supervision of the employees under 
him: Interviewing, selecting, and training of employees; setting and 
adjusting their rates of pay and hours of work; directing their work; 
maintaining their production or sales records for use in supervision or 
control; appraising their productivity and efficiency for the purpose of 
recommending promotions or other changes in their status; handling their 
complaints and grievances and disciplining them when necessary; planning 
the work; determining the techniques to be used; apportioning the work 
among the workers; determining the type of materials, supplies, 
machinery or tools to be used or merchandise to be bought, stocked and 
sold; controlling the flow and distribution of materials or merchandise 
and supplies; providing for the safety of the men and the property.



Sec. 541.103  Primary duty.

    A determination of whether an employee has management as his primary 
duty must be based on all the facts in a particular case. The amount of 
time spent in the performance of the managerial duties is a useful guide 
in determining whether management is the primary duty of an employee. In 
the ordinary case it may be taken as a good rule of thumb that primary 
duty means the major part, or over 50 percent, of the employee's time. 
Thus, an employee who spends over 50 percent of his time in management 
would have management as his primary duty. Time alone, however, is not 
the sole test, and in situations where the employee does not spend over 
50 percent of his time in managerial duties, he might nevertheless have 
management as his primary duty if the other pertinent factors support 
such a conclusion. Some of these pertinent factors are the relative 
importance of the managerial duties as compared with other types of 
duties, the frequency with which the employee exercises discretionary 
powers, his relative freedom from supervision, and the relationship 
between his salary and the wages paid other employees for the kind of 
nonexempt work performed by the supervisor. For example, in some 
departments, or subdivisions of an establishment, an employee has broad 
responsibilities similar to those of the owner or manager of the 
establishment, but generally spends more than 50 percent of his time in 
production or sales work. While engaged in such work he supervises other 
employees, directs the work of warehouse and delivery men, approves 
advertising, orders merchandise, handles customer complaints, authorizes 
payment of bills, or performs other management duties as the day-to-day 
operations require. He will be considered to have management

[[Page 185]]

as his primary duty. In the data processing field an employee who 
directs the day-to-day activities of a single group of programers and 
who performs the more complex or responsible jobs in programing will be 
considered to have management as his primary duty.



Sec. 541.104  Department or subdivision.

    (a) In order to qualify under Sec. 541.1, the employee's managerial 
duties must be performed with respect to the enterprise in which he is 
employed or a customarily recognized department or subdivision thereof. 
The phrase ``a customarily recognized department or subdivision'' is 
intended to distinguish between a mere collection of men assigned from 
time to time to a specific job or series of jobs and a unit with 
permanent status and function. In order properly to classify an 
individual as an executive he must be more than merely a supervisor of 
two or more employees; nor is it sufficient that he merely participates 
in the management of the unit. He must be in charge of and have as his 
primary duty the management of a recognized unit which has a continuing 
function.
    (b) In the vast majority of cases there is no difficulty in 
determining whether an individual is in charge of a customarily 
recognized department or subdivision of a department. For example, it is 
clear that where an enterprise comprises more than one establishment, 
the employee in charge of each establishment may be considered in charge 
of a subdivision of the enterprise. Questions arise principally in cases 
involving supervisors who work outside the employer's establishment, 
move from place to place, or have different subordinates at different 
times.
    (c) In such instances, in determining whether the employee is in 
charge of a recognized unit with a continuing function, it is the 
division's position that the unit supervised need not be physically 
within the employer's establishment and may move from place to place, 
and that continuity of the same subordinate personnel is not absolutely 
essential to the existence of a recognized unit with a continuing 
function, although in the ordinary case a fixed location and continuity 
of personnel are both helpful in establishing the existence of such a 
unit. The following examples will illustrate these points.
    (d) The projects on which an individual in charge of a certain type 
of construction work is employed may occur at different locations, and 
he may even hire most of his workforce at these locations. The mere fact 
that he moves his location would not invalidate his exemption if there 
are other factors which show that he is actually in charge of a 
recognized unit with a continuing function in the organization.
    (e) Nor will an otherwise exempt employee lose the exemption merely 
because he draws the men under his supervision from a pool, if other 
factors are present which indicate that he is in charge of a recognized 
unit with a continuing function. For instance, if this employee is in 
charge of the unit which has the continuing responsibility for making 
all installations for his employer, or all installations in a particular 
city or a designated portion of a city, he would be in charge of a 
department or subdivision despite the fact that he draws his 
subordinates from a pool of available men.
    (f) It cannot be said, however, that a supervisor drawn from a pool 
of supervisors who supervises employees assigned to him from a pool and 
who is assigned a job or series of jobs from day to day or week to week 
has the status of an executive. Such an employee is not in charge of a 
recognized unit with a continuing function.



Sec. 541.105  Two or more other employees.

    (a) An employee will qualify as an ``executive'' under Sec. 541.1 
only if he customarily and regularly supervises at least two full-time 
employees or the equivalent. For example, if the ``executive'' 
supervises one full-time and two part-time employees of whom one works 
morning and one, afternoons; or four part-time employees, two of whom 
work mornings and two afternoons, this requirement would be met.
    (b) The employees supervised must be employed in the department 
which the ``executive'' is managing.
    (c) It has been the experience of the divisions that a supervisor of 
a few as

[[Page 186]]

two employees usually performs nonexempt work in excess of the general 
20-percent tolerance provided in Sec. 541.1.
    (d) In a large machine shop there may be a machine-shop supervisor 
and two assistant machine-shop supervisors. Assuming that they meet all 
the other qualifications Sec. 541.1 and particularly that they are not 
working foremen, they should certainly qualify for the exemption. A 
small department in a plant or in an office is usually supervised by one 
person. Any attempt to classify one of the other workers in the 
department as an executive merely by giving him an honorific title such 
as assistant supervisor will almost inevitably fail as there will not be 
sufficient true supervisory or other managerial work to keep two persons 
occupied. On the other hand, it is incorrect to assume that in a large 
department, such as a large shoe department in a retail store which has 
separate sections for men's, women's, and children's shoes, for example, 
the supervision cannot be distributed among two or three employees, 
conceivably among more. In such instances, assuming that the other tests 
are met, especially the one concerning the performance of nonexempt 
work, each such employee ``customarily and regularly directs the work of 
two or more other employees therein.''
    (e) An employee who merely assists the manager or buyer of a 
particular department and supervises two or more employees only in the 
actual manager's or buyer's absence, however, does not meet this 
requirement. For example, where a single unsegregated department, such 
as a women's sportswear department or a men's shirt department in a 
retail store, is managed by a buyer, with the assistance of one or more 
assistant buyers, only one employee, the buyer, can be considered an 
executive, even though the assistant buyers at times exercise some 
managerial and supervisory responsibilities. A shared responsibility for 
the supervision of the same two or more employees in the same department 
does not satisfy the requirement that the employee ``customarily and 
regularly directs the work of two or more employees therein.''



Sec. 541.106  Authority to hire or fire.

    Section 541.1 requires that an exempt executive employee have the 
authority to hire or fire other employees or that his suggestions and 
recommendations as to hiring or firing and as to advancement and 
promotion or any other change of status of the employees who he 
supervises will be given particular weight. Thus, no employee, whether 
high or low in the hierarchy of management, can be considered as 
employed in a bona fide executive capacity unless he is directly 
concerned either with the hiring or the firing and other change of 
status of the employees under his supervision, whether by direct action 
or by recommendation to those to who the hiring and firing functions are 
delegated.



Sec. 541.107  Discretionary powers.

    (a) Section 541.1(d) requires that an exempt executive employee 
customarily and regularly exercise discretionary powers. A person whose 
work is so completly routinized that he has no discretion does not 
qualify for exemption.
    (b) The phrase ``customarily and regularly'' signifies a frequency 
which must be greater than occasional but which, of course, may be less 
than constant. The requirement will be met by the employee who normally 
and recurrently is called upon to exercise and does exercise 
discretionary powers in the day-to-day performance of his duties. The 
requirement is not met by the occasional exercise of discretionary 
powers.



Sec. 541.108  Work directly and closely related.

    (a) This phrase brings within the category of exempt work not only 
the actual management of the department and the supervision of the 
employees therein, but also activities which are closely associated with 
the performance of the duties involved in such managerial and 
supervisory functions or responsibilities. The supervision of employees 
and the management of a department include a great many directly and 
closely related tasks which are different from the work performed by 
subordinates and are commonly performed by supervisors because they are

[[Page 187]]

helpful in supervising the employees or contribute to the smooth 
functioning of the department for which they are responsible. Frequently 
such exempt work is of a kind which in establishments that are organized 
differently or which are larger and have greater specialization of 
function, may be performed by a nonexempt employee hired especially for 
that purpose. Illustration will serve to make clear the meaning to be 
given the phrase ``directly and closely related''.
    (b) Keeping basic records of working time, for example, is 
frequently performed by a timekeeper employed for that purpose. In such 
cases the work is clearly not exempt in nature. In other establishments 
which are not large enough to employ a timekeeper, or in which the 
timekeeping function has been decentralized, the supervisor of each 
department keeps the basic time records of his own subordinates. In 
these instances, as indicated above, the timekeeping is directly related 
to the function of managing the particular department and supervising 
its employees. However, the preparation of a payroll by a supervisor, 
even the payroll of the employees under his supervision, cannot be 
considered to be exempt work, since the preparation of a payroll does 
not aid in the supervision of the employees or the management of the 
department. Similarly, the keeping by a supervisor of production or 
sales records of his own subordinates for use in supervision or control 
would be exempt work, while the maintenance of production records of 
employees not under his direction would not be exempt work.
    (c) Another example of work which may be directly and closely 
related to the performance of management duties is the distribution of 
materials or merchandise and supplies. Maintaining control of the flow 
of materials or merchandise and supplies in a department is ordinarily a 
responsibility of the managerial employee in charge. In many 
nonmercantile establishments the actual distribution of materials is 
performed by nonexempt employees under the supervisor's direction. In 
other establishments it is not uncommon to leave the actual distribution 
of materials and supplies in the hands of the supervisor. In such cases 
it is exempt work since it is directly and closely related to the 
managerial responsibility of maintaining the flow of materials. In a 
large retail establishment, however, where the replenishing of stocks of 
merchandise on the sales floor is customarily assigned to a nonexempt 
employee, the performance of such work by the manager or buyer of the 
department is nonexempt. The amount of time the manager or buyer spends 
in such work must be offset against the statutory tolerance for 
nonexempt work. The supervision and control of a flow of merchandise to 
the sales floor, of course, is directly and closely related to the 
managerial responsibility of the manager or buyer.
    (d) Setup work is another illustration of work which may be exempt 
under certain circumstances if performed by a supervisor. The nature of 
setup work differs in various industries and for different operations. 
Some setup work is typically performed by the same employees who perform 
the ``production'' work; that is, the employee who operates the machine 
also ``sets it up'' or adjusts it for the particular job at hand. Such 
setup work is part of the production operation and is not exempt. In 
other instances the setting up of the work is a highly skilled operation 
which the ordinary production worker or machine tender typically does 
not perform. In some plants, particularly large ones, such setup work 
may be performed by employees whose duties are not supervisory in 
nature. In other plants, however, particularly small plants, such work 
is a regular duty of the executive and is directly and closely related 
to his responsibility for the work performance of his subordinates and 
for the adequacy of the final product. Under such circumstances it is 
exempt work. In the data processing field the work of a supervisor when 
he performs the more complex or more responsible work in a program 
utilizing several computer programers or computer operators would be 
exempt activity.
    (e) Similarly, a supervisor who spot checks and examines the work of 
his subordinates to determine whether

[[Page 188]]

they are performing their duties properly, and whether the product is 
satisfactory, is performing work which is directly and closely related 
to his managerial and supervisory functions. However, this kind of 
examining and checking must be distinguished from the kind which is 
normally performed by an ``examiner,'' ``checker,'' or ``inspector,'' 
and which is really a production operation rather than a part of the 
supervisory function. Likewise, a department manager or buyer in a 
retail or service establishment who goes about the sales floor observing 
the work of sales personnel under his supervision to determine the 
effectiveness of their sales techniques, checking on the quality of 
customer service being given, or observing customer preferences and 
reactions to the lines, styles, types, colors, and quality of the 
merchandise offered, is performing work which is directly and closely 
related to his managerial and supervisory functions. His actual 
participation, except for supervisory training or demonstration 
purposes, in such activities as making sales to customers, replenishing 
stocks of merchandise on the sales floor, removing merchandise from 
fitting rooms and returning to stock or shelves, however, is not. The 
amount of time a manager or buyer spends in the performance of such 
activities must be included in computing the percentage limitation on 
nonexempt work.
    (f) Watching machines is another duty which may be exempt when 
performed by a supervisor under proper circumstances. Obviously the mere 
watching of machines in operation cannot be considered exempt work 
where, as in certain industries in which the machinery is largely 
automatic, it is an ordinary production function. Thus, an employee who 
watches machines for the purpose of seeing that they operate properly or 
for the purpose of making repairs or adjustments is performing nonexempt 
work. On the other hand, a supervisor who watches the operation of the 
machinery in his department in the sense that he ``keeps an eye out for 
trouble'' is performing work which is directly and closely related to 
his managerial responsibilities. Making an occasional adjustment in the 
machinery under such circumstances is also exempt work.
    (g) A word of caution is necessary in connection with these 
illustrations. The recordkeeping, material distributing, setup work, 
machine watching and adjusting, and inspecting, examining, observing and 
checking referred to in the examples of exempt work are presumably the 
kind which are supervisory and managerial functions rather than merely 
``production'' work. Frequently it is difficult to distinguish the 
managerial type from the type which is a production operation. In 
deciding such difficult cases it should be borne in mind that it is one 
of the objectives of Sec. 541.1 to exclude from the definition foremen 
who hold ``dual'' or combination jobs. (See discussion of working 
foremen in Sec. 541.115.) Thus, if work of this kind takes up a large 
part of the employee's time it would be evidence that management of the 
department is not the primary duty of the employee, that such work is a 
production operation rather than a function directly and closely related 
to the supervisory or managerial duties, and that the employee is in 
reality a combination foreman-``setup'' man, foreman-machine adjuster 
(or mechanic), or foreman-examiner, floorman-salesperson, etc., rather 
than a bona fide executive.



Sec. 541.109  Emergencies.

    (a) Under certain occasional emergency conditions, work which is 
normally performed by nonexempt employees and is nonexempt in nature 
will be directly and closely related to the performance of the exempt 
functions of management and supervision and will therefore be exempt 
work. In effect, this means that a bona fide executive who performs work 
of a normally nonexempt nature on rare occasions because of the 
existence of a real emergency will not, because of the performance of 
such emergency work, lose the exemption. Bona fide executives include 
among their responsibilities the safety of the employees under their 
supervision, the preservation and protection of the merchandise, 
machinery or other property of the department or subdivision in their 
charge from damage due to unforeseen circumstances, and the prevention 
of widespread

[[Page 189]]

breakdown in production, sales, or service operations. Consequently, 
when conditions beyond control arise which threaten the safety of the 
employees, or a cessation of operations, or serious damage to the 
employer's property, any manual or other normally nonexempt work 
performed in an effort to prevent such results is considered exempt work 
and is not included in computing the percentage limitation on nonexempt 
work.
    (b) The rule in paragraph (a) of this section is not applicable, 
however, to nonexempt work arising out of occurrences which are not 
beyond control or for which the employer can reasonably provide in the 
normal course of business.
    (c) A few illustrations may be helpful in distinguishing routine 
work performed as a result of real emergencies of the kind for which no 
provision can practicably be made by the employer in advance of their 
occurrence and routine work which is not in this category. It is obvious 
that a mine superintendent who pitches in after an explosion and digs 
out the men who are trapped in the mine is still a bona fide executive 
during that week. On the other hand, the manager of a cleaning 
establishment who personally performs the cleaning operations on 
expensive garments because he fears damage to the fabrics if he allows 
his subordinates to handle them is not performing ``emergency'' work of 
the kind which can be considered exempt. Nor is the manager of a 
department in a retail store performing exempt work when he personally 
waits on a special or impatient customer because he fears the loss of 
the sale or the customer's goodwill if he allows a salesperson to serve 
him. The performance of nonexempt work by executives during inventory-
taking, during other periods of heavy workload, or the handling of rush 
orders are the kinds of activities which the percentage tolerances are 
intended to cover. For example, pitching in on the production line in a 
canning plant during seasonal operations is not exempt ``emergency'' 
work even if the objective is to keep the food from spoiling. Similarly, 
pitching in behind the sales counter in a retail store during special 
sales or during Christmas or Easter or other peak sales periods is not 
``emergency'' work, even if the objective is to improve customer service 
and the store's sales record. Maintenance work is not emergency work 
even if performed at night or during weekends. Relieving subordinates 
during rest or vacation periods cannot be considered in the nature of 
``emergency'' work since the need for replacements can be anticipated. 
Whether replacing the subordinate at the workbench, or production line, 
or sales counter during the first day or partial day of an illness would 
be considered exempt emergency work would depend upon the circumstances 
in the particular case. Such factors as the size of the establishment 
and of the executive's department, the nature of the industry, the 
consequences that would flow from the failure to replace the ailing 
employee immediately, and the feasibility of filling the employee's 
place promptly would all have to be weighed.
    (d) All the regular cleaning up around machinery, even when 
necessary to prevent fire or explosion, is not ``emergency'' work. 
However, the removal by an executive of dirt or obstructions 
constituting a hazard to life or property need not be included in 
computing the percentage limitation if it is not reasonably practicable 
for anyone but the supervisor to perform the work and it is the kind of 
``emergency'' which has not been recurring. The occasional performance 
of repair work in case of a breakdown of machinery, or the collapse of a 
display rack, or damage to or exceptional disarray of merchandise caused 
by accident or a customer's carelessness may be considered exempt work 
if the breakdown is one which the employer cannot reasonably anticipate. 
However, recurring breakdowns or disarrays requiring frequent attention, 
such as that of an old belt or machine which breaks down repeatedly or 
merchandise displays constantly requiring re-sorting or straightening, 
are the kind for which provision could reasonably be made and repair of 
which must be considered as nonexempt.



Sec. 541.110  Occasional tasks.

    (a) In addition to the type of work which by its very nature is 
readily

[[Page 190]]

identifiable as being directly and closely related to the performance of 
the supervisory and management duties, there is another type of work 
which may be considered directly and closely related to the performance 
of these duties. In many establishments the proper management of a 
department requires the performance of a variety of occasional, 
infrequently recurring tasks which cannot practicably be performed by 
the production workers and are usually performed by the executive. These 
small tasks when viewed separately without regard to their relationship 
to the executive's overall functions might appear to constitute 
nonexempt work. In reality they are the means of properly carrying out 
the employee's management functions and responsibilities in connection 
with men, materials, and production. The particular tasks are not 
specifically assigned to the ``executive'' but are performed by him in 
his discretion.
    (b) It might be possible for the executive to take one of his 
subordinates away from his usual tasks, instruct and direct him in the 
work to be done, and wait for him to finish it. It would certainly not 
be practicable, however, to manage a department in this fashion. With 
respect to such occasional and relatively inconsequential tasks, it is 
the practice in industry generally for the executive to perform them 
rather than to delegate them to other persons. When any one of these 
tasks is done frequently, however, it takes on the character of a 
regular production function which could be performed by a nonexempt 
employee and must be counted as nonexempt work. In determining whether 
such work is directly and closely related to the performance of the 
management duties, consideration should be given to whether it is: (1) 
The same as the work performed by any of the subordinates of the 
executive; or (2) a specifically assigned task of the executive 
employees; or (3) practicably delegable to nonexempt employees in the 
establishment; or (4) repetitive and frequently recurring.



Sec. 541.111  Nonexempt work generally.

    (a) As indicated in Sec. 541.101 the term ``nonexempt work,'' as 
used in this subpart, includes all work other than that described in 
Sec. 541.1 (a) through (d) and the activities directly and closely 
related to such work.
    (b) Nonexempt work is easily identifiable where, as in the usual 
case, it consists of work of the same nature as that performed by the 
nonexempt subordinates of the ``executive.'' It is more difficult to 
identify in cases where supervisory employees spend a significant amount 
of time in activities not performed by any of their subordinates and not 
consisting of actual supervision and management. In such cases careful 
analysis of the employee's duties with reference to the phrase 
``directly and closely related to the performance of the work described 
in paragraphs (a) through (d) of this section'' will usually be 
necessary in arriving at a determination.



Sec. 541.112  Percentage limitations on nonexempt work.

    (a) An employee will not qualify for exemption as an executive if he 
devotes more than 20 percent, or in the case of an employee of a retail 
or service establishment if he devotes as much as 40 percent, of his 
hours worked in the workweek to nonexempt work. This test is applied on 
a workweek basis and the percentage of time spent on nonexempt work is 
computed on the time worked by the employee.
    (b)(1) The maximum allowance of 20 percent for nonexempt work 
applies unless the establishment by which the employeee is employed 
qualifies for the higher allowance as a retail or service establishment 
within the meaning of the Act. Such an establishment must be a distinct 
physical place of business, open to the general public, which is engaged 
on the premises in making sales of goods or services to which the 
concept of retail selling or servicing applies. As defined in section 
13(a)(2) of the Act, such an establishment must make at least 75 percent 
of its annual dollar volume of sales of goods or services from sales 
that are both not for resale and recognized as retail in the particular 
industry. Types of establishments which may meet these tests include 
stores selling consumer goods to the public; hotels; motels; 
restaurants; some types of amusement or recreational establishments (but 
not those

[[Page 191]]

offering wagering or gambling facilities); hospitals, or institutions 
primarily engaged in the care of the sick, the aged, the mentally ill, 
or defective residing on the premises, if open to the general public; 
public parking lots and parking garages; auto repair shops; gasoline 
service stations (but not truck stops); funeral homes; cemeteries; etc. 
Further explanation and illustrations of the establishments included in 
the term ``retail or service establishment'' as used in the Act may be 
found in part 779 of this chapter.
    (2) Public and private elementary and secondary schools and 
institutions of higher education are, as a rule, not retail or service 
establishments, because they are not engaged in sales of goods or 
services to which the retail concept applies. Under section 
13(a)(2)(iii) of the Act prior to the 1966 amendments, it was possible 
for private schools for physically or mentally handicapped or gifted 
children to qualify as retail or service establishments if they met the 
statutory tests, because the special types of services provided to their 
students were considered by Congress to be of a kind that may be 
recognized as retail. Such schools, unless the nature of their 
operations has changed, may continue to qualify as retail or service 
establishments and, if they do, may utilize the greater tolerance for 
nonexempt work provided for executive and administrative employees of 
retail or service establishments under section 13(a)(1) of the Act.
    (3) The legislative history of the Act makes it plain that an 
establishment engaged in laundering, cleaning, or repairing clothing or 
fabrics is not a retail or service establishment. When the Act was 
amended in 1949, Congress excluded such establishments from the 
exemption under section 13(a)(2) because of the lack of a retail concept 
in the services sold by such establishments, and provided a separate 
exemption for them which did not depend on status as a retailer. Again 
in 1966, when this exemption was repealed, Congress made it plain by 
exclusionary language that the exemption for retail or service 
establishments was not to be applied to laundries or dry cleaners.
    (c) There are two special exceptions to the percentage limitations 
of paragraph (a) of this section:
    (1) That relating to the employee in ``sole charge'' of an 
independent or branch establishment, and
    (2) That relating to an employee owning a 20-percent interest in the 
enterprise in which he is employed. These except the employee only from 
the percentage limitations on nonexempt work. They do not except the 
employee from any of the other requirements of Sec. 541.1. Thus, while 
the percentage limitations on nonexempt work are not applicable, it is 
clear that an employee would not qualify for the exemption if he 
performs so much nonexempt work that he could no longer meet the 
requirement of Sec. 541.1(a) that his primary duty must consist of the 
management of the enterprise in which he is employed or of a customarily 
recognized department or subdivision thereof.



Sec. 541.113  Sole-charge exception.

    (a) An exception from the percentage limitations on nonexempt work 
is provided in Sec. 541.1(e) for ``an employee who is in sole charge of 
an independent establishment or a physically separated branch 
establishment * * *''. Such an employee is considered to be employed in 
a bona fide executive capacity even though he exceeds the applicable 
percentage limitation on nonexempt work.
    (b) The term ``independent establishment'' must be given full 
weight. The establishment must have a fixed location and must be 
geographically separated from other company property. The management of 
operations within one among several buildings located on a single or 
adjoining tracts of company property does not qualify for the exemption 
under this heading. In the case of a branch, there must be a true and 
complete physical separation from the main office.
    (c)(1) A determination as to the status as ``an independent 
establishment or a physically separated branch establishment'' of any 
part of the business operations on the premises of a retail or other 
establishment, however, must be made on the basis of the physical and 
economic facts in the particular situation. (See 29 CFR 779.225, 
779.305, 779.306.) A leased department cannot be

[[Page 192]]

considered to be a separate establishment where, for example, it and the 
retail store in which it is located operate under a common trade name 
and the store may determine, or have the power to determine, the leased 
department's space location, the type of merchandise it will sell its 
pricing policy, its hours of operation and some or all of its hiring, 
firing, and other personnel policies, and matters such as advertising, 
adjustment, and credit operations, insurance and taxes, are handled on a 
unified basis by the store.
    (2) A leased department may qualify as a separate establishment, 
however, where, among other things, the facts show that the lessee 
maintains a separate entrance and operates under a separate name, with 
its own separate employees and records, and in other respects conducts 
his business independently of the lessor's. In such a case the leased 
department would enjoy the same status as a physically separated branch 
store.
    (d) Since the employee must be in ``sole charge, only one person in 
any establishment can qualify as an executive under this exception, and 
then only if he is the top person in charge at that location. (It is 
possible for other persons in the same establishment to qualify for 
exemption as executive employees, but not under the exception from the 
nonexempt work limitation.) Thus, it would not be applicable to an 
employee who is in charge of a branch establishment but whose superior 
makes his office on the premises. An example is a district manager who 
has overall supervisory functions in relation to a number of branch 
offices, but makes his office at one of the branches. The branch manager 
at the branch where the district manager's office is located is not in 
``sole charge'' of the establishment and does not come within the 
exception. This does not mean that the ``sole-charge'' status of an 
employee will be considered lost because of an occasional visit to the 
branch office of the superior of the person in charge, or, in the case 
of an independent establishment by the visit for a short period on 1 or 
2 days a week of the proprietor or principal corporate officer of the 
establishment. In these situations the sole-charge status of the 
employee in question will appear from the facts as to his functions, 
particularly in the intervals between visits. If, during these 
intervals, the decisions normally made by an executive in charge of a 
branch or an independent establishment are reserved for the superior, 
the employee is not in sole charge. If such decisions are not reserved 
for the superior, the sole-charge status will not be lost merely because 
of the superior's visits.
    (e) In order to qualify for the exception the employee must 
ordinarily be in charge of all the company activities at the location 
where he is employed. If he is in charge of only a portion of the 
company's activities at his location, then he cannot be said to be in 
sole charge of an independent establishment or a physically separated 
branch establishment. In exceptional cases the divisions have found that 
an executive employee may be in sole charge of all activities at a 
branch office except that one independent function which is not 
integrated with those managed by the executive is also performed at the 
branch. This one function is not important to the activities managed by 
the executive and constitutes only an insignificant portion of the 
employer's activities at that branch. A typical example of this type of 
situation is one in which ``desk space'' in a warehouse otherwise 
devoted to the storage and shipment of parts is assigned a salesman who 
reports to the sales manager or other company official located at the 
home office. Normally only one employee (at most two or three, but in 
any event an insignificant number when compared with the total number of 
persons employed at the branch) is engaged in the nonintegrated function 
for which the executive whose sole-charge status is in question is not 
responsible. Under such circumstances the employee does not lose his 
``sole-charge'' status merely because of the desk-space assignment.



Sec. 541.114  Exception for owners of 20-percent interest.

    (a) An exception from the percentage limitations on nonexempt work 
is provided in Sec. 541.1(e) for an employee ``who owns at least a 20-
percent interest in

[[Page 193]]

the enterprise in which he is employed''. This provision recognizes the 
special status of a shareholder of an enterprise who is actively engaged 
in its management.
    (b) The exception is available to an employee owning a bona fide 20-
percent equity in the enterprise in which he is employed regardless of 
whether the business is a corporate or other type of organization.



Sec. 541.115  Working foremen.

    (a) The primary purpose of the exclusionary language placing a 
limitation on the amount of nonexempt work is to distinguish between the 
bona fide executive and the ``working'' foreman or ``working'' 
supervisor who regularly performs ``production'' work or other work 
which is unrelated or only remotely related to his supervisory 
activities. (The term ``working'' foreman is used in this subpart in the 
sense indicated in the text and should not be construed to mean only one 
who performs work similar to that performed by his subordinates.)
    (b) One type of working foreman or working supervisor most commonly 
found in industry works alongside his subordinates. Such employees, 
sometimes known as strawbosses, or gang or group leaders perform the 
same kind of work as that performed by their subordinates, and also 
carry on supervisory functions. Clearly, the work of the same nature as 
that performed by the employees' subordinates must be counted as 
nonexempt work and if the amount of such work performed is substantial 
the exemption does not apply. (``Substantial,'' as used in this section, 
means more than 20 percent. See discussion of the 20-percent limitation 
on nonexempt work in Sec. 541.112.) A foreman in a dress shop, for 
example, who operates a sewing machine to produce the product is 
performing clearly nonexempt work. However, this should not be confused 
with the operation of a sewing machine by a foreman to instruct his 
subordinates in the making of a new product, such as a garment, before 
it goes into production.
    (c) Another type of working foreman or working supervisor who cannot 
be classed as a bona fide executive is one who spends a substantial 
amount of time in work which, although not performed by his own 
subordinates, consists of ordinary production work or other routine, 
recurrent, repetitive tasks which are a regular part of his duties. Such 
an employee is in effect holding a dual job. He may be, for example, a 
combination foreman-production worker, supervisor-clerk, or foreman 
combined with some other skilled or unskilled occupation. His 
nonsupervisory duties in such instances are unrelated to anything he 
must do to supervise the employees under him or to manage the 
department. They are in many instances mere ``fill-in'' tasks performed 
because the job does not involve sufficient executive duties to occupy 
an employee's full time. In other instances the nonsupervisory, 
nonmanagerial duties may be the principal ones and the supervisory or 
managerial duties are subordinate and are assigned to the particular 
employee because it is more convenient to rest the responsibility for 
the first line of supervision in the hands of the person who performs 
these other duties. Typical of employees in dual jobs which may involve 
a substantial amount of nonexempt work are:
    (1) Foremen or supervisors who also perform one or more of the 
``production'' or ``operating'' functions, though no other employees in 
the plant perform such work. An example of this kind of employee is the 
foreman in a millinery or garment plant who is also the cutter, or the 
foreman in a garment factory who operates a multiple-needle machine not 
requiring a full-time operator;
    (2) Foremen or supervisors who have as a regular part of their 
duties the adjustment, repair, or maintenance of machinery or equipment. 
Examples in this category are the foreman-fixer in the hosiery industry 
who devotes a considerable amount of time to making adjustments and 
repairs to the machines of his subordinates, or the planer-mill foreman 
who is also the ``machine man'' who repairs the machines and grinds the 
knives;
    (3) Foremen or supervisors who perform clerical work other than the 
maintenance of the time and production records of their subordinates; 
for example, the foreman of the shipping

[[Page 194]]

room who makes out the bills of lading and other shipping records, the 
warehouse foreman who also acts as inventory clerk, the head shipper who 
also has charge of a finished goods stock room, assisting in placing 
goods on shelves and keeping perpetual inventory records, or the office 
manager, head bookkeeper, or chief clerk who performs routine 
bookkeeping. There is no doubt that the head bookkeeper, for example, 
who spends a substantial amount of his time keeping books of the same 
general nature as those kept by the other bookkeepers, even though his 
books are confidential in nature or cover different transactions from 
the books maintained by the under bookkeepers, is not primarily an 
executive employee and should not be so considered.



Sec. 541.116  Trainees, executive.

    The exemption is applicable to an employee employed in a bona fide 
executive capacity and does not include employees training to become 
executives and not actually performing the duties of an executive.



Sec. 541.117  Amount of salary required.

    (a) Except as otherwise noted in paragraph (b) of this section, 
compensation on a salary basis at a rate of not less than $155 per week, 
exclusive of board, lodging, or other facilities, is required for 
exemption as an executive. The $155 a week may be translated into 
equivalent amounts for periods longer than 1 week. The requirement will 
be met if the employee is compensated biweekly on a salary basis of 
$310, semimonthly on a salary basis of $335.84 or monthly on a salary 
basis of $671.67. However, the shortest period of payment which will 
meet the requirement of payment ``on a salary basis'' is a week.
    (b) In Puerto Rico, the Virgin Islands, and American Samoa, the 
salary test for exemption as an ``executive'' is $130 per week for other 
than an employee of the Federal Government.
    (c) The payment of the required salary must be exclusive of board, 
lodging, or other facilities; that is, free and clear. On the other 
hand, the regulations in subpart A of this part do not prohibit the sale 
of such facilities to executives on a cash basis if they are negotiated 
in the same manner as similar transactions with other persons.
    (d) The validity of including a salary requirement in the 
regulations in subpart A of this part has been sustained in a number of 
appellate court decisions. See, for example, Walling v. Yeakley, 140 F. 
(2d) 830 (C.A. 10); Helliwell v. Haberman, 140 F. (2d) 833 (C.A. 2); and 
Walling v. Morris, 155 F. (2d) 832 (C.A. 6) (reversed on another point 
in 332 U.S. 442); Wirtz v. Mississippi Publishers, 364 F. (2d) 603 (C.A. 
5); Craig v. Far West Engineering Co., 265 F. (2d) 251 (C.A. 9) cert. 
den. 361 U.S. 816; Hofer v. Federal Cartridge Corp., 71 F. Supp. 243 
(D.C. Minn.).

[38 FR 11390, May 7, 1973, as amended at 40 FR 7092, Feb. 19, 1975]

    Effective Date Note: Paragraphs (a) and (b) in Sec. 541.117 were 
revised at 46 FR 3014, Jan. 13, 1981. In accordance with the President's 
Memorandum of January 29, 1981 (46 FR 11227, Feb. 6, 1981), the 
effective date was postponed indefinitely at 46 FR 11972, Feb. 12, 1981.
    The text of paragraphs (a) and (b) set forth above remains in effect 
pending further action by the issuing agency. The text of the postponed 
regulation appears below.

Sec. 541.117  Amount of salary required.

    (a) Except as otherwise noted in paragraph (b) of this section, 
compensation on a salary basis at a rate of not less than $225 per week 
beginning February 13, 1981 and $250 per week beginning February 13, 
1983, exclusive of board, lodging, or other facilities, is required for 
exemption as an executive. The $225 a week or $250 a week may be 
translated into equivalent amounts for periods longer than 1 week. For 
example, based on $250 a week, the requirement will be met if the 
employee is compensated biweekly on a salary basis of $500, semimonthly 
on a salary basis of $541.67 or monthly on a salary basis of $1083.33. 
However, the shortest period of payment which will meet the requirement 
of payment ``on a salary basis'' is a week.
    (b) In Puerto Rico, the Virgin Islands, and American Samoa, the 
salary test for exemption as an ``executive'' is $180 per week beginning 
Febraruy 13, 1981 and $200 per week beginning February 13, 1983 for 
other than an employee of the Federal Goverment.

                                * * * * *



Sec. 541.118  Salary basis.

    (a) An employee will be considered to be paid ``on a salary basis'' 
within the

[[Page 195]]

meaning of the regulations if under his employment agreement he 
regularly receives each pay period on a weekly, or less frequent basis, 
a predetermined amount constituting all or part of his compensation, 
which amount is not subject to reduction because of variations in the 
quality or quantity of the work performed. Subject to the exceptions 
provided below, the employee must receive his full salary for any week 
in which he performs any work without regard to the number of days or 
hours worked. This policy is also subject to the general rule that an 
employee need not be paid for any workweek in which he performs no work.
    (1) An employee will not be considered to be ``on a salary basis'' 
if deductions from his predetermined compensation are made for absences 
occasioned by the employer or by the operating requirements of the 
business. Accordingly, if the employee is ready, willing, and able to 
work, deductions may not be made for time when work is not available.
    (2) Deductions may be made, however, when the employee absents 
himself from work for a day or more for personal reasons, other than 
sickness or accident. Thus, if an employee is absent for a day or longer 
to handle personal affairs, his salaried status will not be affected if 
deductions are made from his salary for such absences.
    (3) Deductions may also be made for absences of a day or more 
occasioned by sickness or disability (including industrial accidents) if 
the deduction is made in accordance with a bona fide plan, policy or 
practice of providing compensation for loss of salary occasioned by both 
sickness and disability. Thus, if the employer's particular plan, policy 
or practice provides compensation for such absences, deductions for 
absences of a day or longer because of sickness or disability may be 
made before an employee has qualified under such plan, policy or 
practice, and after he has exhausted his leave allowance thereunder. It 
is not required that the employee be paid any portion of his salary for 
such days or days for which he receives compensation for leave under 
such plan, policy or practice. Similarly, if the employer operates under 
a State sickness and disability insurance law, or a private sickness and 
disability insurance plan, deductions may be made for absences of a 
working day or longer if benefits are provided in accordance with the 
particular law or plan. In the case of an industrial accident, the 
``salary basis'' requirement will be met if the employee is compensated 
for loss of salary in accordance with the applicable compensation law or 
the plan adopted by the employer, provided the employer also has some 
plan, policy or practice of providing compensation for sickness and 
disability other than that relating to industrial accidents.
    (4) Deductions may not be made for absences of an employee caused by 
jury duty, attendance as a witness, or temporary military leave. The 
employer may, however, offset any amounts received by an employee as 
jury or witness fees or military pay for a particular week against the 
salary due for that particular week without loss of the exemption.
    (5) Penalties imposed in good faith for infractions of safety rules 
of major significance will not affect the employee's salaried status. 
Safety rules of major significance include only those relating to the 
prevention of serious danger to the plant, or other employees, such as 
rules prohibiting smoking in explosive plants, oil refineries, and coal 
mines.
    (6) The effect of making a deduction which is not permitted under 
these interpretations will depend upon the facts in the particular case. 
Where deductions are generally made when there is no work available, it 
indicates that there was no intention to pay the employee on a salary 
basis. In such a case the exemption would not be applicable to him 
during the entire period when such deductions were being made. On the 
other hand, where a deduction not permitted by these interpretations is 
inadvertent, or is made for reasons other than lack of work, the 
exemption will not be considered to have been lost if the employer 
reimburses the employee for such deductions and promises to comply in 
the future.
    (b) Minimum guarantee plus extras. It should be noted that the 
salary may consist of a predetermined amount constituting all or part of 
the employee's

[[Page 196]]

compensation. In other words, additional compensation besides the salary 
is not inconsistent with the salary basis of payment. The requirement 
will be met, for example, by a branch manager who receives a salary of 
$155 or more a week and in addition, a commission of 1 percent of the 
branch sales. The requirement will also be met by a branch manager who 
receives a percentage of the sales or profits of the branch, if the 
employment arrangement also includes a guarantee of at least the minimum 
weekly salary (or the equivalent for a monthly or other period) required 
by the regulations. Another type of situation in which the requirement 
will be met is that of an employee paid on a daily or shift basis, if 
the employment arrangement includes a provision that the employee will 
receive not less than the amount specified in the regulations in any 
week in which the employee performs any work. Such arrangements are 
subject to the exceptions in paragraph (a) of this section. The test of 
payment on a salary basis will not be met, however, if the salary is 
divided into two parts for the purpose of circumventing the requirement 
of payment ``on a salary basis''. For example, a salary of $200 in each 
week in which any work is performed, and an additional $50 which is made 
subject to deductions which, are not permitted under paragraph (a) of 
this section.
    (c) Initial and terminal weeks. Failure to pay the full salary in 
the initial or terminal week of employment is not considered 
inconsistent with the salary basis of payment. In such weeks the payment 
of a proportionate part of the employee's salary for the time actually 
worked will meet the requirement. However, this should not be construed 
to mean that an employee is on a salary basis within the meaning of the 
regulations if he is employed occasionally for a few days and is paid a 
proportionate part of the weekly salary when so employed. Moreover, even 
payment of the full weekly salary under such circumstances would not 
meet the requirement, since casual or occasional employment for a few 
days at a time is inconsistent with employment on a salary basis within 
the meaning of the regulations.

[38 FR 11390, May 7, 1973, as amended at 40 FR 7092, Feb. 19, 1975]

    Effective Date Note: Paragraph (b) in Sec. 541.118 was revised at 46 
FR 3014, Jan. 13, 1981. In accordance with the President's Memorandum of 
January 29, 1981 (46 FR 11227, Feb. 6, 1981), the effective date was 
postponed indefinitely at 46 FR 11972, Feb. 12, 1981.
    The text of paragraph (b) set forth above remains in effect pending 
further action by the issuing agency. The text of the postponed 
regulation appears below.

Sec. 541.118  Salary basis.

                                * * * * *

    (b) Minimum guarantee plus extras. It should be noted that the 
salary may consist of a predetermined amount constituting all or part of 
the employee's compensation. In other words, additional compensation 
besides the salary is not inconsistent with the salary basis of payment. 
The requirement will be met, for example, by a branch manager who 
receives a salary of $250 or more a week and in addition, a commission 
of 1 percent of the branch sales. The requirement will also be met by a 
branch manager who receives a percentage of the sales or profits of the 
branch, if the employment arrangement also includes a guarantee of at 
least the minimum weekly salary (or the equivalent for a monthly or 
other period) required by the regulations. Another type of situation in 
which the requirement will be met is that of an employee paid on a daily 
or shift basis, if the employment arrangement includes a provision that 
the employee will receive not less than the amount specified in the 
regulations in any week in which the employee performs any work. Such 
arrangements are subject to the exceptions in paragraph (a) of this 
section. The test of payment on a salary basis will not be met, however, 
if the salary is divided into two parts for the purpose of circumventing 
the requirement of payment ``on a salary basis''. For example, a salary 
of $300 in each week in which any work is performed, and an additional 
$55 which is made subject to deductions which are not permitted under 
paragraph (a) of this section.

                                * * * * *



Sec. 541.119  Special proviso for high salaried executives.

    (a) Except as otherwise noted in paragraph (b) of this section, 
Sec. 541.1 contains an upset or high salary proviso for managerial 
employees who are

[[Page 197]]

compensated on a salary basis at a rate of not less than $250 per week 
exclusive of board, lodging, or other facilities. Such a highly paid 
employee is deemed to meet all the requirements in paragraphs (a) 
through (f) of Sec. 541.1 if the employee's primary duty consists of the 
management of the enterprise in which employed or of a customarily 
recognized department or subdivision thereof and includes the customary 
and regular direction of the work of two or more other employees 
therein. If an employee qualifies for exemption under this proviso, it 
is not necessary to test that employee's qualifications in detail under 
paragraphs (a) through (f) of Sec. 541.1 of this part.
    (b) In Puerto Rico, the Virgin Islands, and American Samoa the 
proviso of Sec. 541.1(f) applies to those managerial employees (other 
than employees of the Federal Government) who are paid on a salary basis 
at a rate of not less than $200 per week.
    (c) Mechanics, carpenters, linotype operators, or craftsmen of other 
kinds are not exempt under the proviso no matter how highly paid they 
might be.

[40 FR 7093, Feb. 19, 1975]

    Effective Date Note: Section 541.119 was revised at 46 FR 3014, Jan. 
13, 1981. In accordance with the President's Memorandum of January 29, 
1981 (46 FR 11227, Feb. 6, 1981), the effective date was postponed 
indefinitely at 46 FR 11972, Feb. 12, 1981.
    The text of Sec. 541.119 set forth above remains in effect pending 
further action by the issuing agency. The text of the postponed 
regulation appears below.

Sec. 541.119  Special proviso for high salaried executives.

    (a) Except as otherwise noted in paragraph (b) of this section, 
Sec. 541.1 contains an upset or high salary proviso for managerial 
employees who are compensated on a salary basis at a rate of not less 
than $320 per week beginning February 13, 1981 and $345 per week 
beginning February 13, 1983 exclusive of board, lodging, or other 
facilities. Such a highly paid employee is deemed to meet all the 
requirements in paragraphs (a) through (f) of Sec. 541.1 if the 
employee's primary duty consists of the management of the enterprise in 
which employed or of a customarily recognized department or subdivision 
thereof and includes the customary and regular direction of the work of 
two or more other employees therein. If an employee qualifies for 
exemption under this proviso, it is not necessary to test that 
employee's qualifications in detail under paragraphs (a) through (f) of 
Sec. 541.1 of this part.
    (b) In Puerto Rico, the Virgin Islands, and American Samoa the 
proviso of Sec. 541.1(f) applies to those managerial employees (other 
than employees of the Federal Government) who are paid on a salary basis 
at a rate of not less than $260 per week beginning February 13, 1981 and 
$285 per week beginning February 13, 1983.
    (c) Mechanics, carpenters, linotype operators, or craftsmen of other 
kinds are not exempt under the proviso no matter how highly paid they 
might be.

        Employee Employed in a Bona Fide Administrative Capacity



Sec. 541.201  Types of administrative employees.

    (a) Three types of employees are described in Sec. 541.2(c) who, if 
they meet the other tests in Sec. 541.2, qualify for exemption as 
``administrative'' employees.
    (1) Executive and administrative assistants. The first type is the 
assistant to a proprietor or to an executive or administrative employee. 
In modern industrial practice there has been a steady and increasing use 
of persons who assist an executive in the performance of his duties 
without themselves having executive authority. Typical titles of persons 
in this group are executive assistant to the president, confidential 
assistant, executive secretary, assistant to the general manager, 
administrative assistant and, in retail or service establishments, 
assistant manager and assistant buyer. Generally speaking, such 
assistants are found in large establishments where the official assisted 
has duties of such scope and which require so much attention that the 
work of personal scrutiny, correspondence, and interviews must be 
delegated.
    (2) Staff employees. (i) Employees included in the second 
alternative in the definition are those who can be described as staff 
rather than line employees, or as functional rather than departmental 
heads. They include among others employees who act as advisory 
specialists to the management. Typical examples of such advisory 
specialists are tax experts, insurance experts, sales research experts, 
wage-rate

[[Page 198]]

analysts, investment consultants, foreign exchange consultants, and 
statisticians.
    (ii) Also included are persons who are in charge of a so-called 
functional department, which may frequently be a one-man department. 
Typical examples of such employees are credit managers, purchasing 
agents, buyers, safety directors, personnel directors, and labor 
relations directors.
    (3) Those who perform special assignments. (i) The third group 
consists of persons who perform special assignments. Among them are to 
be found a number of persons whose work is performed away from the 
employer's place of business. Typical titles of such persons are lease 
buyers, field representatives of utility companies, location managers of 
motion picture companies, and district gaugers for oil companies. It 
should be particularly noted that this is a field which is rife with 
honorific titles that do not adequately portray the nature of the 
employee's duties. The field representative of a utility company, for 
example, may be a ``glorified serviceman.''
    (ii) This classification also includes employees whose special 
assignments are performed entirely or partly inside their employer's 
place of business. Examples are special organization planners, 
customers' brokers in stock exchange firms, so-called account executives 
in advertising firms and contact or promotion men of various types.
    (b) Job titles insufficient as yardsticks. (1) The employees for 
whom exemption is sought under the term ``administrative'' have 
extremely diverse functions and a wide variety of titles. A title alone 
is of little or no assistance in determining the true importance of an 
employee to the employer or his exempt or nonexempt status under the 
regulations in subpart A of this part. Titles can be had cheaply and are 
of no determinative value. Thus, while there are supervisors of 
production control (whose decisions affect the welfare of large numbers 
of employees) who qualify for exemption under section 13(a)(1), it is 
not hard to call a rate setter (whose functions are limited to timing 
certain operations and jotting down times on a standardized form) a 
``methods engineer'' or a ``production-control supervisor.''
    (2) Many more examples could be cited to show that titles are 
insufficient as yardsticks. As has been indicated previously, the exempt 
or nonexempt status of any particular employee must be determined on the 
basis of whether his duties, responsibilities, and salary meet all the 
requirements of the appropriate section of the regulations in subpart A 
of this part.
    (c) Individuals engaged in the overall academic administration of an 
elementary or secondary school system include the superintendent or 
other head of the system and those of his assistants whose duties are 
primarily concerned with administration of such matters as curriculum, 
quality and methods of instructing, measuring and testing the learning 
potential and achievement of students, establishing and maintaining 
academic and grading standards, and other aspects of the teaching 
program. In individual school establishments those engaged in overall 
academic administration include the principal and the vice principals 
who are responsible for the operation of the school. Other employees 
engaged in academic administration are such department heads as the 
heads of the mathematics department, the English department, the foreign 
language department, the manual crafts department, and the like. 
Institutions of higher education have similar organizational structure, 
although in many cases somewhat more complex.



Sec. 541.202  Categories of work.

    (a) The work generally performed by employees who perform 
administrative tasks may be classified into the following general 
categories for purposes of the definition: (This classification is 
without regard to whether the work is manual or nonmanual. The problem 
of manual work as it affects the exemption of administrative employees 
is discussed in Sec. 541.203.) (1) The work specifically described in 
paragraphs (a), (b), and (c) of Sec. 541.2; (2) routine work which is 
directly and closely related to the performance of the work which is 
described in paragraphs (a), (b), and (c) of Sec. 541.2; and (3) routine 
work which is not related or is only remotely related

[[Page 199]]

to the administrative duties. (As used in this subpart the phrase 
``routine work'' means work which does not require the exercise of 
discretion and independent judgment. It is not necessarily restricted to 
work which is repetitive in nature.)
    (b) The work in category 1, that which is specifically described in 
Sec. 541.2 as requiring the exercise of discretion and independent 
judgment, is clearly exempt in nature.
    (c) Category 2 consists of work which if separated from the work in 
category 1 would appear to be routine, or on a fairly low level, and 
which does not itself require the exercise of discretion and independent 
judgment, but which has a direct and close relationship to the 
performance of the more important duties. The directness and closeness 
of the relationship may vary depending upon the nature of the job and 
the size and organization of the establishment in which the work is 
performed. This ``directly and closely related'' work includes routine 
work which necessarily arises out of the administrative duties, and the 
routine work without which the employee's more important work cannot be 
performed properly. It also includes a variety of routine tasks which 
may not be essential to the proper performance of the more important 
duties but which are functionally related to them directly and closely. 
In this latter category are activities which an administrative employee 
may reasonably be expected to perform in connection with carrying out 
his administrative functions including duties which either facilitate or 
arise incidentally from the performance of such functions and are 
commonly performed in connection with them.
    (d) These ``directly and closely related'' duties are 
distinguishable from the last group, category 3, those which are 
remotely related or completely unrelated to the more important tasks. 
The work in this last category is nonexempt and must not exceed the 20-
percent limitation for nonexempt work (up to 40 percent or service 
establishment) if the exemption is to apply.
    (e) Work performed by employees in the capacity of ``academic 
administrative'' personnel is a category of administrative work limited 
to a class of employees engaged in academic administration as contrasted 
with the general usable of ``administrative'' in the act. The term 
``academic administrative'' denotes administration relating to the 
academic operations and functions in a school rather than to 
administration along the lines of general business operations. Academic 
administrative personnel are performing operations directly in the field 
of education. Jobs relating to areas outside the educational field are 
not within the definition of academic administration. Examples of jobs 
in school systems, and educational establishments and institutions, 
which are outside the term academic administration are jobs relating to 
building management and maintenance, jobs relating to the health of the 
students and academic staff such as social workers, psychologist, lunch 
room manager, or dietitian. Employees in such work which is not 
considered academic administration may qualify for exemption under other 
provisions of Sec. 541.2 or under other sections of the regulations in 
subpart A of this part provided the requirements for such exemptions are 
met.



Sec. 541.203  Nonmanual work.

    (a) The requirement that the work performed by an exempt 
administrative employee must be office work or nonmanual work restricts 
the exemption to ``white-collar'' employees who meet the tests. If the 
work performed is ``office'' work it is immaterial whether it is manual 
or nonmanual in nature. This is consistent with the intent to include 
within the term ``administrative'' only employees who are basically 
white-collar employees since the accepted usage of the term ``white-
collar'' includes all office workers. Persons employed in the routine 
operation of office machines are engaged in office work within the 
meaning of Sec. 541.2 (although they would not qualify as administrative 
employees since they do not meet the other requirements of Sec. 541.2).
    (b) Section 541.2 does not completely prohibit the performance of 
manual work by an ``administrative'' employee. The performance by an 
otherwise exempt administrative employee of some manual work which is 
directly

[[Page 200]]

and closely related to the work requiring the exercise of discretion and 
independent judgment is not inconsistent with the principle that the 
exemption is limited to ``white-collar'' employees. However, if the 
employee performs so much manual work (other than office work) that he 
cannot be said to be basically a ``white-collar'' employee he does not 
qualify for exemption as a bona fide administrative employee, even if 
the manual work he performs is directly and closely related to the work 
requiring the exercise of discretion and independent judgment. Thus, it 
is obvious that employees who spend most of their time in using tools, 
instruments, machinery, or other equipment, or in performing repetitive 
operations with their hands, no matter how much skill is required, would 
not be bona fide administrative employees within the meaning of 
Sec. 541.2. An office employee, on the other hand, is a ``white-collar'' 
worker, and would not lose the exemption on the grounds that he is not 
primarily engaged in ``nonmanual'' work, although he would lose the 
exemption if he failed to meet any of the other requirements.



Sec. 541.205  Directly related to management policies or general business 
operations.

    (a) The phrase ``directly related to management policies or general 
business operations of his employer or his employer's customers'' 
describes those types of activities relating to the administrative 
operations of a business as distinguished from ``production'' or, in a 
retail or service establishment, ``sales'' work. In addition to 
describing the types of activities, the phrase limits the exemption to 
persons who perform work of substantial importance to the management or 
operation of the business of his employer or his employer's customers.
    (b) The administrative operations of the business include the work 
performed by so-called white-collar employees engaged in ``servicing'' a 
business as, for, example, advising the management, planning, 
negotiating, representing the company, purchasing, promoting sales, and 
business research and control. An employee performing such work is 
engaged in activities relating to the administrative operations of the 
business notwithstanding that he is employed as an administrative 
assistant to an executive in the production department of the business.
    (c) As used to describe work of substantial importance to the 
management or operation of the business, the phrase ``directly related 
to management policies or general business operations'' is not limited 
to persons who participate in the formulation of management policies or 
in the operation of the business as a whole. Employees whose work is 
``directly related'' to management policies or to general business 
operations include those work affects policy or whose responsibility it 
is to execute or carry it out. The phrase also includes a wide variety 
of persons who either carry out major assignments in conducting the 
operations of the business, or whose work affects business operations to 
a substantial degree, even though their assignments are tasks related to 
the operation of a particular segment of the business.
    (1) It is not possible to lay down specific rules that will indicate 
the precise point at which work becomes of substantial importance to the 
management or operation of a business. It should be clear that the 
cashier of a bank performs work at a responsible level and may therefore 
be said to be performing work directly related to management policies or 
general business operations. On the other hand, the bank teller does 
not. Likewise it is clear that bookkeepers, secretaries, and clerks of 
various kinds hold the run-of-the-mine positions in any ordinary 
business and are not performing work directly related to management 
policies or general business operations. On the other hand, a tax 
consultant employed either by an individual company or by a firm of 
consultants is ordinarily doing work of substantial importance to the 
management or operation of a business.
    (2) An employee performing routine clerical duties obviously is not 
performing work of substantial importance to the management or operation 
of the business even though he may exercise some measure of discretion 
and judgment as to the manner in which he

[[Page 201]]

performs his clerical tasks. A messenger boy who is entrusted with 
carrying large sums of money or securities cannot be said to be doing 
work of importance to the business even though serious consequences may 
flow from his neglect. An employee operating very expensive equipment 
may cause serious loss to his employer by the improper performance of 
his duties. An inspector, such as, for example, an inspector for an 
insurance company, may cause loss to his employer by the failure to 
perform his job properly. But such employees, obviously, are not 
performing work of such substantial importance to the management or 
operation of the business that it can be said to be ``directly related 
to management policies or general business operations'' as that phrase 
is used in Sec. 541.2.
    (3) Some firms employ persons whom they describe as 
``statisticians.'' If all such a person does, in effect, is to tabulate 
data, he is clearly not exempt. However, if such an employee makes 
analyses of data and draws conclusions which are important to the 
determination of, or which, in fact, determine financial, merchandising, 
or other policy, clearly he is doing work directly related to management 
policies or general business operations. Similarly, a personnel employee 
may be a clerk at a hiring window of a plant, or he may be a man who 
determines or effects personnel policies affecting all the workers in 
the establishment. In the latter case, he is clearly doing work directly 
related to management policies or general business operations. These 
examples illustrate the two extremes. In each case, between these 
extreme types there are many employees whose work may be of substantial 
importance to the management or operation of the business, depending 
upon the particular facts.
    (4) Another example of an employee whose work may be important to 
the welfare of the business is a buyer of a particular article or 
equipment in an industrial plant or personnel commonly called assistant 
buyers in retail or service establishments. Where such work is of 
substantial importance to the management or operation of the business, 
even though it may be limited to purchasing for a particular department 
of the business, it is directly related to management policies or 
general business operations.
    (5) The test of ``directly related to management policies or general 
business operations'' is also met by many persons employed as advisory 
specialists and consultants of various kinds, credit managers, safety 
directors, claim agents and adjusters, wage-rate analysts, tax experts, 
account executives of advertising agencies, customers' brokers in stock 
exchange firms, promotion men, and many others.
    (6) It should be noted in this connection that an employer's volume 
of activities may make it necessary to employ a number of employees in 
some of these categories. The fact that there are a number of other 
employees of the same employer carrying out assignments of the same 
relative importance or performing identical work does not affect the 
determination of whether they meet this test so long as the work of each 
such employee is of substantial importance to the management or 
operation of the business.
    (7) In the data processing field some firms employ persons described 
as systems analysts and computer programers. If such employees are 
concerned with the planning, scheduling, and coordination of activities 
which are required to develop systems for processing data to obtain 
solutions to complex business, scientific, or engineering problems of 
his employer or his employer's customers, he is clearly doing work 
directly related to management policies or general business operations.
    (d) Under Sec. 541.2 the ``management policies or general business 
operations'' may be those of the employer or the employer's customers. 
For example, many bona fide administrative employees perform important 
functions as advisers and consultants but are employed by a concern 
engaged in furnishing such services for a fee. Typical instances are tax 
experts, labor relations consultants, financial consultants, systems 
analysts, or resident buyers. Such employees, if they meet the other 
requirements of Sec. 541.2, qualify for exemption regardless of whether 
the management policies or general

[[Page 202]]

business operations to which their work is directly related are those of 
their employer's clients or customers or those of their employer.



Sec. 541.206  Primary duty.

    (a) The definition of ``administrative'' exempts only employees who 
are primarily engaged in the responsible work which is characteristic of 
employment in a bona fide administrative capacity. Thus, the employee 
must have as his primary duty office or nonmanual work directly related 
to management policies or general business operations of his employer or 
his employer's customers, or, in the case of ``academic administrative 
personnel,'' the employee must have as his primary duty work that is 
directly related to academic administration or general academic 
operations of the school in whose operations he is employed.
    (b) In determining whether an employee's exempt work meets the 
``primary duty'' requirement, the principles explained in Sec. 541.103 
in the discussion of ``primary duty'' under the definition of 
``executive'' are applicable.



Sec. 541.207  Discretion and independent judgment.

    (a) In general, the exercise of discretion and independent judgment 
involves the comparison and the evaluation of possible courses of 
conduct and acting or making a decision after the various possibilities 
have been considered. The term as used in the regulations in subpart A 
of this part, more over, implies that the person has the authority or 
power to make an independent choice, free from immediate direction or 
supervision and with respect to matters of significance. (Without 
actually attempting to define the term, the courts have given it this 
meaning in applying it in particular cases. See, for example, Walling v. 
Sterling Ice Co., 69 F. Supp. 655, reversed on other grounds, 165 F. 
(2d) 265 (CCA 10). See also Connell v. Delaware Aircraft Industries, 55 
Atl. (2d) 637.)
    (b) The term must be applied in the light of all the facts involved 
in the particular employment situation in which the question arises. It 
has been most frequently misunderstood and misapplied by employers and 
employees in cases involving the following: (1) Confusion between the 
exercise of discretion and independent judgment, and the use of skill in 
applying techniques, procedures, or specific standards; and (2) 
misapplication of the term to employees making decisions relating to 
matters of little consequence.
    (c) Distinguished from skills and procedures:
    (1) Perhaps the most frequent cause of misapplication of the term 
``discretion and independent judgment'' is the failure to distinguish it 
from the use of skill in various respects. An employee who merely 
applies his knowledge in following prescribed procedures or determining 
which procedure to follow, or who determines whether specified standards 
are met or whether an object falls into one or another of a number of 
definite grades, classes, or other categories, with or without the use 
of testing or measuring devices, is not exercising discretion and 
independent judgment within the meaning of Sec. 541.2. This is true even 
if there is some leeway in reaching a conclusion, as when an acceptable 
standard includes a range or a tolerance above or below a specific 
standard.
    (2) A typical example of the application of skills and procedures is 
ordinary inspection work of various kinds. Inspectors normally perform 
specialized work along standardized lines involving well-established 
techniques and procedures which may have been cataloged and described in 
manuals or other sources. Such inspectors rely on techniques and skills 
acquired by special training or experience. They may have some leeway in 
the performance of their work but only within closely prescribed limits. 
Employees of this type may make recommendations on the basis of the 
information they develop in the course of their inspections (as for 
example, to accept or reject an insurance risk or a product manufactured 
to specifications), but these recommendations are based on the 
development of the facts as to whether there is conformity with the 
prescribed standards. In such cases a decision to depart from the 
prescribed standards or the permitted tolerance is typically made by the 
inspector's superior. The

[[Page 203]]

inspector is engaged in exercising skill rather than discretion and 
independent judgment within the meaning of the regulations in Subpart A 
of this part.
    (3) A related group of employees usually called examiners or graders 
perform similar work involving the comparison of products with 
established standards which are frequently cataloged. Often, after 
continued reference to the written standards, or through experience, the 
employee acquires sufficient knowledge so that reference to written 
standards is unnecessary. The substitution of the employee's memory for 
the manual of standards does not convert the character of the work 
performed to work requiring the exercise of discretion and independent 
judgment as required by the regulations in subpart A of this part. The 
mere fact that the employee uses his knowledge and experience does not 
change his decision, i.e., that the product does or does not conform 
with the established standard, into a real decision in a significant 
matter.
    (4) For example, certain ``graders'' of lumber turn over each 
``stick'' to see both sides, after which a crayon mark is made to 
indicate the grade. These lumber grades are well established and the 
employee's familiarity with them stems from his experience and training. 
Skill rather than discretion and independent judgment is exercised in 
grading the lumber. This does not necessarily mean, however, that all 
employees who grade lumber or other commodities are not exercising 
discretion and independent judgment. Grading of commodities for which 
there are no recognized or established standards may require the 
exercise of discretion and independent judgment as contemplated by the 
regulations in subpart A of this part. In addition, in those situations 
in which an otherwise exempt buyer does grading, the grading even though 
routine work, may be considered exempt if it is directly and closely 
related to the exempt buying.
    (5) Another type of situation where skill in the application of 
techniques and procedures is sometimes confused with discretion and 
independent judgment is the ``screening'' of applicants by a personnel 
clerk. Typically such an employee will interview applicants and obtain 
from them data regarding their qualifications and fitness for 
employment. These data may be entered on a form specially prepared for 
the purpose. The ``screening'' operation consists of rejecting all 
applicants who do not meet standards for the particular job or for 
employment by the company. The standards are usually set by the 
employee's superior or other company officials, and the decision to hire 
from the group of applicants who do meet the standards is similarly made 
by other company officials. It seems clear that such a personnel clerk 
does not exercise discretion and independent judgment as required by the 
regulations in subpart A of this part. On the other hand an exempt 
personnel manager will often perform similar functions; that is, he will 
interview applicants to obtain the necessary data and eliminate 
applicants who are not qualified. The personnel manager will then hire 
one of the qualified applicants. Thus, when the interviewing and 
screening are performed by the personnel manager who does the hiring 
they constitute exempt work, even though routine, because this work is 
directly and closely related to the employee's exempt functions.
    (6) Similarly, comparison shopping performed by an employee of a 
retail store who merely reports to the buyer his findings as to the 
prices at which a competitor's store is offering merchandise of the same 
or comparable quality does not involve the exercise of discretion and 
judgment as required in the regulations. Discretion and judgment are 
exercised, however, by the buyer who evaluates the assistants' reports 
and on the basis of their findings directs that certain items be re-
priced. When performed by the buyer who actually makes the decisions 
which affect the buying or pricing policies of the department he 
manages, the comparison shopping, although in itself a comparatively 
routine operation, is directly and closely related to his managerial 
responsibility.
    (7) In the data processing field a systems analyst is exercising 
discretion and independent judgment when he develops methods to process, 
for example, accounting, inventory, sales, and other

[[Page 204]]

business information by using electronic computers. He also exercises 
discretion and independent judgment when he determines the exact nature 
of the data processing problem, and structures the problem in a logical 
manner so that a system to solve the problem and obtain the desired 
results can be developed. Whether a computer programer is exercising 
discretion and independent judgment depends on the facts in each 
particular case. Every problem processed in a computer first must be 
carefully analyzed so that exact and logical steps for its solution can 
be worked out. When this preliminary work is done by a computer 
programer he is exercising discretion and independent judgment. A 
computer programer would also be using discretion and independent 
judgment when he determines exactly what information must be used to 
prepare the necessary documents and by ascertaining the exact form in 
which the information is to be presented. Examples of work not requiring 
the level of discretion and judgment contemplated by the regulations are 
highly technical and mechanical operations such as the preparation of a 
flow chart or diagram showing the order in which the computer must 
perform each operation, the preparation of instructions to the console 
operator who runs the computer or the actual running of the computer by 
the programmer, and the debugging of a program. It is clear that the 
duties of data processing employees such as tape librarians, keypunch 
operators, computer operators, junior programers and programer trainees 
are so closely supervised as to preclude the use of the required 
discretion and independent judgment.
    (d) Decisions in significant matters. (1) The second type of 
situation in which some difficulty with this phrase has been experienced 
relates to the level or importance of the matters with respect to which 
the employee may make decisions. In one sense almost every employee is 
required to use some discretion and independent judgment. Thus, it is 
frequently left to a truckdriver to decide which route to follow in 
going from one place to another; the shipping clerk is normally 
permitted to decide the method of packing and the mode of shipment of 
small orders; and the bookkeeper may usually decide whether he will post 
first to one ledger rather than another. Yet it is obvious that these 
decisions do not constitute the exercise of discretion and independent 
judgment of the level contemplated by the regulations in subpart A of 
this part. The divisions have consistently taken the position that 
decisions of this nature concerning relatively unimportant matters are 
not those intended by the regulations in subpart A of this part, but 
that the discretion and independent judgment exercised must be real and 
substantial, that is, they must be exercised with respect to matters of 
consequence. This interpretation has also been followed by courts in 
decisions involving the application of the regulations in this part, to 
particular cases.
    (2) It is not possible to state a general rule which will 
distinguish in each of the many thousands of possible factual situations 
between the making of real decisions in significant matters and the 
making of choices involving matters of little or no consequence. It 
should be clear, however, that the term ``discretion and independent 
judgment,'' within the meaning of the regulations in subpart A of this 
part, does not apply to the kinds of decisions normally made by clerical 
and similar types of employees. The term does apply to the kinds of 
decisions normally made by persons who formulate or participate in the 
formulation of policy within their spheres of responsibility or who 
exercise authority within a wide range to commit their employer in 
substantial respects financially or otherwise. The regulations in 
subpart A of this part, however, do not require the exercise of 
discretion and independent judgment at so high a level. The regulations 
in subpart A of this part also contemplate the kind of discretion and 
independent judgment exercised by an administrative assistant to an 
executive, who without specific instructions or prescribed procedures, 
arranges interviews and meetings, and handles callers and meetings 
himself where the executive's personal attention is not required. It 
includes the kind of discretion and independent judgment exercised by a 
customer's

[[Page 205]]

man in a brokerage house in deciding what recommendations to make to a 
customer for the purchase of securities. It may include the kind of 
descretion and judgment exercised by buyers, certain wholesale salesmen, 
representatives, and other contact persons who are given reasonable 
latitude in carrying on negotiation on behalf of their employers.
    (e) Final decisions not necessary. (1) The term ``discretion and 
independent judgment'' as used in the regulations in subpart A of this 
part does not necessarily imply that the decisions made by the employee 
must have a finality that goes with unlimited authority and a complete 
absence of review. The decisions made as a result of the exercise of 
discretion and independent judgment may consist of recommendations for 
action rather than the actual taking of action. The fact that an 
employee's decision may be subject to review and that upon occasion the 
decisions are revised or reversed after review does not mean that the 
employee is not exercising discretion and independent judgment within 
the meaning of the regulations in subpart A of this part. For example, 
the assistant to the president of a large corporation may regularly 
reply to correspondence addressed to the president. Typically, such an 
assistant will submit the more important replies to the president for 
review before they are sent out. Upon occasion, after review, the 
president may alter or discard the prepared reply and direct that 
another be sent instead. This section by the president would not, 
however, destroy the exempt character of the assistant's function, and 
does not mean that he does not exercise discretion and independent 
judgment in answering correspondence and in deciding which replies may 
be sent out without review by the president.
    (2) The policies formulated by the credit manager of a large 
corporation may be subject to review by higher company officials who may 
approve or disapprove these policies. The management consultant who has 
made a study of the operations of a business and who has drawn a 
proposed change in organization, may have the plan reviewed or revised 
by his superiors before it is submitted to the client. The purchasing 
agent may be required to consult with top management officials before 
making a purchase commitment for raw materials in excess of the 
contemplated plant needs for a stated period, say 6 months. These 
employees exercise discretion and independent judgment within the 
meaning of the regulations despite the fact that their decisions or 
recommendations are reviewed at a higher level.
    (f) Distinguished from loss through neglect. A distinction must also 
be made between the exercise of discretion and independent judgment with 
respect to matters of consequence and the cases where serious 
consequences may result from the negligence of an employee, the failure 
to follow instruction or procedures, the improper application of skills, 
or the choice of the wrong techniques. The operator of a very intricate 
piece of machinery, for example, may cause a complete stoppage of 
production or a breakdown of his very expensive machine merely by 
pressing the wrong button. A bank teller who is engaged in receipt and 
disbursement of money at a teller's window and in related routine 
bookkeeping duties may, by crediting the wrong account with a deposit, 
cause his employer to suffer a large financial loss. An inspector 
charged with responsibility for loading oil onto a ship may, by not 
applying correct techniques fail to notice the presence of foreign 
ingredients in the tank with resulting contamination of the cargo and 
serious loss to his employer. In these cases, the work of the employee 
does not require the exercise of discretion and independent judgment 
within the meaning of the regulations in subpart A of this part.
    (g) Customarily and regularly. The work of an exempt administrative 
employee must require the exercise of discretion and independent 
judgment customarily and regularly. The phrase ``customarily and 
regularly'' signifies a frequency which must be greater than occasional 
but which, of course, may be less than constant. The requirement will be 
met by the employee who normally and recurrently is called upon to 
exercise and does exercise discretion and independent judgment in the 
day-to-day performance of his duties. The

[[Page 206]]

requirement is not met by the occasional exercise of discretion and 
independent judgment.



Sec. 541.208  Directly and closely related.

    (a) As indicated in Sec. 541.202, work which is directly and closely 
related to the performance of the work described in Sec. 541.2 is 
considered exempt work. Some illustrations may be helpful in clarifying 
the differences between such work and work which is unrelated or only 
remotely related to the work described in Sec. 541.2.
    (b)(1) For purposes of illustration, the case of a high-salaried 
management consultant about whose exempt status as an administrative 
employee there is no doubt will be assumed. The particular employee is 
employed by a firm of consultants and performs work in which he 
customarily and regularly exercises discretion and independent judgment. 
The work consists primarily of analyzing, and recommending changes in, 
the business operations of his employer's client. This work falls in the 
category of exempt work described in Sec. 541.2.
    (2) In the course of performing that work, the consultant makes 
extensive notes recording the flow of work and materials through the 
office and plant of the client. Standing alone or separated from the 
primary duty such notemaking would be routine in nature. However, this 
is work without which the more important work cannot be performed 
properly. It is ``directly and closely related'' to the administrative 
work and is therefore exempt work. Upon his return to the office of his 
employer the consultant personally types his report and draws, first in 
rough and then in final form, a proposed table of organization to be 
submitted with it. Although all this work may not be essential to the 
performance of his more important work, it is all directly and closely 
related to that work and should be considered exempt. While it is 
possible to assign the typing and final drafting to nonexempt employees 
and in fact it is frequently the practice to do so, it is not required 
as a condition of exemption that it be so delegated.
    (3) Finally, if because this particular employee has a special skill 
in such work, he also drafts tables or organization proposed by other 
consultants, he would then be performing routine work wholly unrelated, 
or at best only remotely related, to his more important work. Under such 
conditions, the drafting is nonexempt.
    (c) Another illustration is the credit manager who makes and 
administers the credit policy of his employer. Establishing credit 
limits for customers and authorizing the shipment of orders on credit, 
including the decisions to exceed or otherwise vary these limits in the 
case of particular customers, would be exempt work of the kind 
specifically described in Sec. 541.2. Work which is directly and closely 
related to these exempt duties may include such activities as checking 
the status of accounts to determine whether the credit limit would be 
exceeded by the shipment of a new order, removing credit reports from 
the files for analysis and writing letters giving credit data and 
experience to other employers or credit agencies. On the other hand, any 
general office or bookkeeping work is nonexempt work. For instance, 
posting to the accounts receivable ledger would be only remotely related 
to his administrative work and must be considered nonexempt.
    (d) One phase of the work of an administrative assistant to a bona 
fide executive or administrative employee provides another illustration. 
The work of determining whether to answer correspondence personally, 
call it to his superior's attention, or route it to someone else for 
reply requires the exercise of discretion and independent judgment and 
is exempt work of the kind described in Sec. 541.2. Opening the mail for 
the purpose of reading it to make the decisions indicated will be 
directly and closely related to the administrative work described. 
However, merely opening mail and placing it unread before his superior 
or some other person would be related only remotely, if at all, to any 
work requiring the exercise of discretion and independent judgment.
    (e) The following additional examples may also be of value in 
applying these principles. A traffic manager is employed to handle the 
company's transportation problems. The exempt work

[[Page 207]]

performed by such an employee would include planning the most economical 
and quickest routes for shipping merchandise to and from the plant, 
contracting for common-carrier and other transportation facilities, 
negotiating with carriers for adjustments for damages to merchandise in 
transit and making the necessary rearrangements resulting from delays, 
damages, or irregularities in transit. This employee may also spend part 
of his time taking city orders (for local deliveries) over the 
telephone. The order-taking is a routine function not directly and 
closely related to the exempt work and must be considered nonexempt.
    (f) An office manager who does not supervise two or more employees 
would not meet the requirements for exemption as an executive employee 
but may possibly qualify for exemption as an administrative employee. 
Such an employee may perform administrative duties, such as the 
executive of the employer's credit policy, the management of the 
company's traffic, purchasing, and other responsible office work 
requiring the customary and regular exercise of discretion and judgment, 
which are clearly exempt. On the other hand, this office manager may 
perform all the bookkeeping, prepare the confidential or regular 
payrolls, and send out monthly statements of account. These latter 
activities are not directly and closely related to the exempt functions 
and are not exempt.



Sec. 541.209  Percentage limitations on nonexempt work.

    (a) Under Sec. 541.2(d), an employee will not qualify for exemption 
as an administrative employee if he devotes more than 20 percent, or, in 
the case of an employee of a retail or service establishment if he 
devotes as much as 40 percent, of his hours worked in the workweek to 
nonexempt work; that is, to activities which are not directly and 
closely related to the performance of the work described in Sec. 541.2 
(a) through (c).
    (b) This test is applied on a workweek basis and the percentage of 
time spent on nonexempt work is computed on the time worked by the 
employee.
    (c) The tolerance for nonexempt work allows the performance of 
nonexempt manual or nonmanual work within the percentages allowed for 
all types of nonexempt work.
    (d) Refer to Sec. 541.112(b) for the definition of a retail or 
service establishment as this term is used in paragraph (a) of this 
section.



Sec. 541.210  Trainees, administrative.

    The exemption is applicable to an employee employed in a bona fide 
administrative capacity and does not include emloyees training for 
employment in an administrative capacity who are not actually performing 
the duties of an administrative employee.



Sec. 541.211  Amount of salary or fees required.

    (a) Except as otherwise noted in paragraphs (b) and (c) of this 
section, compensation on a salary or fee basis at a rate of not less 
than $155 a week, exclusive of board, lodging or other facilities, is 
required for exemption as an administrative employee. The requirement 
will be met if the employee is compensated biweekly on a salary basis of 
$310, semimonthly on a salary basis of $335.84, or monthly on a salary 
basis of $671.67.
    (b) In Puerto Rico, the Virgin Islands, and American Samoa, the 
salary test for exemption as an administrative employee is $125 per week 
for other than an employee of the Federal Government.
    (c) In the case of academic administrative personnel, the 
compensation requirement for exemption as an administrative employee may 
be met either by the payment described in paragraph (a) or (b) of this 
section, whichever is applicable, or alternatively by compensation on a 
salary basis in an amount which is at least equal to the entrance salary 
for teachers in the school system, or educational establishment or 
institution by which the employee is employed.
    (d) The payment of the required salary must be exclusive of board, 
lodging, or other facilities; that is, free and clear. On the other 
hand, the regulations in subpart A of this part do not prohibit the sale 
of such facilities to administrative employees on a cash basis if they 
are negotiated in the same

[[Page 208]]

manner as similar transactions with other persons.

[38 FR 11390, May 7, 1973, as amended at 40 FR 7093, Feb. 19, 1975]

    Effective Date Note: Paragraphs (a) and (b) in Sec. 541.211 were 
revised at 46 FR 3014, Jan. 13, 1981. In accordance with the President's 
Memorandum of January 29, 1981 (46 FR 11227, Feb. 6, 1981), the 
effective date was postponed indefinitely at 46 FR 11972, Feb. 12, 1981.
    The text of paragraphs (a) and (b) set forth above remains in effect 
pending further action by the issuing agency. The text of the postponed 
regulation appears below.

Sec. 541.211  Amount of salary or fees required.

    (a) Except as otherwise noted in paragraphs (b) and (c) of this 
section, compensation on a salary or fee basis at a rate of not less 
than $225 per week beginning February 13, 1981 and $250 per week 
beginning February 13, 1983, exclusive of board, lodging or other 
facilities, is required for exemption as an administrative employee. For 
example, based on $250 a week, the requirement will be met if the 
employee is compensated biweekly on a salary basis of $500, semimonthly 
on a salary basis of $541.67 or monthly on a salary basis of $1,083.33.
    (b) In Puerto Rico, the Virgin Islands, and American Samoa, the 
salary test for exemption as an administrative employee is $180 per week 
beginning February 13, 1981 and $200 per week beginning February 13, 
1983 for other than an employee of the Federal Government.

                                * * * * *



Sec. 541.212  Salary basis.

    The explanation of the salary basis of payment made in Sec. 541.118 
in connection with the definition of ``executive'' is also applicable in 
the definition of ``administrative.''



Sec. 541.213  Fee basis.

    The requirements for exemption as an administrative employee may be 
met by an employee who is compensated on a fee basis as well as by one 
who is paid on a salary basis. For a discussion of payment of a fee 
basis, see Sec. 541.313.



Sec. 541.214  Special proviso for high salaried administrative employees.

    (a) Except as otherwise noted in paragraph (b) of this section, 
Sec. 541.2 contains a special proviso including within the definition of 
``administrative'' an employee who is compensated on a salary or fee 
basis at a rate of not less than $250 per week exclusive of board, 
lodging, or other facilities, and whose primary duty consists of either 
the performance of office or nonmanual work directly related to 
management policies or general business operations of the employer or 
the employer's customers, or the performance of functions in the 
administration of a school system, or educational establishment or 
institution, or of a department or subdivision thereof, in work directly 
related to the academic instruction or training carried on therein, 
where the performance of such primary duty includes work requiring the 
exercise of discretion and independent judgment. Such a highly paid 
employee having such work as his or her primary duty is deemed to meet 
all the requirements in Sec. 541.2 (a) through (e). If an employee 
qualifies for exemption under this provisio, it is not necessary to test 
the employee's qualifications in detail under Sec. 541.2 (a) through 
(e).
    (b) In Puerto Rico, the Virgin Islands, and American Samoa, the 
proviso of Sec. 541.2(e) applies to those administrative employees other 
than an employee of the Federal Government who are compensated on a 
salary or fee basis or not less than $200 per week.

[40 FR 7093, Feb. 19, 1975]

    Effective Date Note: Section 541.214 was revised at 46 FR 3015, Jan. 
13, 1981. In accordance with the President's Memorandum of January 29, 
1981 (46 FR 11227, Feb. 6, 1981), the effective date was postponed 
indefinitely at 46 FR 11972, Feb. 12, 1981.
    The text of Sec. 541.214 set forth above remains in effect pending 
further action by the issuing agency. The text of the postponed 
regulation appears below.

Sec. 541.214  Special proviso for high salaried administrative 
          employees.

    (a) Except as otherwise noted in paragraph (b) of this section, 
Sec. 541.2 contains a special proviso including within the definition of 
``administrative'' an employee who is compensated on a salary or fee 
basis at a rate of not less than $320 per week beginning February 13, 
1981 and $345 per week beginning February 13, 1983, exclusive of board, 
lodging, or other facilities, and whose primary duty consists of either 
the performance of office

[[Page 209]]

or nonmanual work directly related to management policies or general 
business operations of the employer or the employer's customers, or the 
performance of functions in the administration of a school system, or 
educational establishment or institution, or of a department or 
subdivision thereof, in work directly related to the academic 
instruction or training carried on therein, where the performance of 
such primary duty includes work requiring the exercise of discretion and 
independent judgment. Such a highly paid employee having such work as 
his or her primary duty is deemed to meet all the requirements in 
Sec. 541.2 (a) through (e). If an employee qualifies for exemption under 
this provisio, it is not necessary to test the employee's qualifications 
in detail under Sec. 541.2 (a) through (e).
    (b) In Puerto Rico, the Virgin Islands, and American Samoa, the 
proviso of Sec. 541.2(c) applies to those administrative employees other 
than an employee of the Federal Government who are compensated on a 
salary or fee basis or not less than $260 per week beginning February 
13, 1981 and $285 per week beginning February 13, 1983.



Sec. 541.215  Elementary or secondary schools and other educational 
establishments and institutions.

    To be considered for exemption as employed in the capacity of 
academic administrative personnel, the employment must be in connection 
with the operation of an elementary or secondary school system, an 
institution of higher education, or other educational establishment or 
institution. Sections 3(v) and 3(w) of the Act define elementary and 
secondary schools as those day or residential schools which provide 
elementary or secondary education, as determined under State law. Under 
the laws of most States, such education includes the curriculums in 
grades 1 through 12; under many it includes also the introductory 
programs in kindergarten. Such education in some States may include also 
nursery school programs in elementary education and junior college 
curriculums in secondary education. Education above the secondary school 
level is in any event included in the programs of institutions of higher 
education. Special schools for mentally or physically handicapped or 
gifted children are included among the educational establishments in 
which teachers and academic administrative personnel may qualify for the 
administrative exemption, regardless of any classification of such 
schools as elementary, secondary, or higher. Also, for purposes of the 
exemption, no distinction is drawn between public or private schools. 
Accordingly, the classification for other purposes of the school system, 
or educational establishment or institution, is ordinarily not a matter 
requiring consideration in a determination of whether the exemption 
applies. If the work is that of a teacher or academic personnel as 
defined in the regulations, in such an educational system, 
establishment, or institution, and if the other requirement of the 
regulations, are met, the level of instruction involved and the status 
of the school as public or private or operated for profit or not for 
profit will not alter the availability of the exemption.

         Employee Employed in a Bona Fide Professional Capacity



Sec. 541.300  General.

    The term ``professional'' is not restricted to the traditional 
professions of law, medicine, and theology. It includes those 
professions which have a recognized status and which are based on the 
acquirement of professional knowledge through prolonged study. It also 
includes the artistic professions, such as acting or music. Since the 
test of the bona fide professional capacity of such employment is 
different in character from the test for persons in the learned 
professions, an alternative test for such employees is contained in the 
regulations, in addition to the requirements common to both groups.

[38 FR 11390, May 7, 1973. Redesignated at 57 FR 46744, Oct. 9, 1992.]



Sec. 541.301  Learned professions.

    (a) The ``learned'' professions are described in Sec. 541.3(a)(1) as 
those requiring knowledge of an advanced type in a field of science or 
learning customarily acquired by a prolonged course of specialized 
intellectual instruction and study as distinguished from a general 
academic education and from an apprenticeship and from training in the 
performance of routine mental, manual, or physical processes.

[[Page 210]]

    (b) The first element in the requirement is that the knowledge be of 
an advanced type. Thus, generally speaking, it must be knowledge which 
cannot be attained at the high school level.
    (c) Second, it must be knowledge in a field of science or learning. 
This serves to distinguish the professions from the mechanical arts 
where in some instances the knowledge is of a fairly advanced type, but 
not in a field of science or learning.
    (d) The requisite knowledge, in the third place, must be customarily 
acquired by a prolonged course of specialized intellectual instruction 
and study. Here it should be noted that the word ``customarily'' has 
been used to meet a specific problem occurring in many industries. As is 
well known, even in the classical profession of law, there are still a 
few practitioners who have gained their knowledge by home study and 
experience. Characteristically, the members of the profession are 
graduates of law schools, but some few of their fellow professionals 
whose status is equal to theirs, whose attainments are the same, and 
whose word is the same did not enjoy that opportunity. Such persons are 
not barred from the exemption. The word ``customarily'' implies that in 
the vast majority of cases the specific academic training is a 
prerequisite for entrance into the profession. It makes the exemption 
available to the occasional lawyer who has not gone to law school, or 
the occasional chemist who is not the possessor of a degree in 
chemistry, etc., but it does not include the members of such quasi-
professions as journalism in which the bulk of the employees have 
acquired their skill by experience rather than by any formal specialized 
training. It should be noted also that many employees in these quasi-
professions may qualify for exemption under other sections of the 
regulations in subpart A of this part or under the alternative paragraph 
of the ``professional'' definition applicable to the artistic fields.
    (e)(1) Generally speaking the professions which meet the requirement 
for a prolonged course of specialized intellectual instruction and study 
include law, medicine, nursing, accounting, actuarial computation, 
engineering, architecture, teaching, various types of physical, 
chemical, and biological sciences, including pharmacy and registered or 
certified medical technology and so forth. The typical symbol of the 
professional training and the best prima facie evidence of its 
possession is, of course, the appropriate academic degree, and in these 
professions an advanced academic degree is a standard (if not universal) 
prequisite. In the case of registered (or certified) medical 
technologists, successful completion of 3 academic years of 
preprofessional study in an accredited college or university plus a 
fourth year of professional course work in a school of medical 
technology approved by the Council of Medical Education of the American 
Medical Association will be recognized as a prolonged course of 
specialized intellectual instruction and study. Registered nurses have 
traditionally been recognized as professional employees by the Division 
in its enforcement of the act. Although, in some cases, the course of 
study has become shortened (but more concentrated), nurses who are 
registered by the appropriate State examining board will continue to be 
recognized as having met the requirement of Sec. 541.3(a)(1) of the 
regulations.
    (2) The areas in which professional exemptions may be available are 
expanding. As knowledge is developed, academic training is broadened, 
degrees are offered in new and diverse fields, specialties are created 
and the true specialist, so trained, who is given new and greater 
responsibilities, comes closer to meeting the tests. However, just as an 
excellent legal stenographer is not a lawyer, these technical 
specialists must be more than highly skilled technicians. Many employees 
in industry rise to executive or administrative positions by their 
natural ability and good commonsense, combined with long experience with 
a company, without the aid of a college education or degree in any area. 
A college education would perhaps give an executive or administrator a 
more cultured and polished approach but the necessary know-how for doing 
the executive job would depend upon the person's own inherent talent. 
The professional person, on the other hand, attains his status

[[Page 211]]

after a prolonged course of specialized intellectual instruction and 
study.
    (f) Many accountants are exempt as professional employees 
(regardless of whether they are employed by public accounting firms or 
by other types of enterprises). (Some accountants may qualify for 
exemption as bona fide administrative employees.) However, exemption of 
accountants, as in the case of other occupational groups (see 
Sec. 541.308), must be determined on the basis of the individual 
employee's duties and the other criteria in the regulations. It has been 
the Divisions' experience that certified public accountants who meet the 
salary requirement of the regulations will, except in unusual cases, 
meet the requirements of the professional exemption since they meet the 
tests contained in Sec. 541.3. Similarly, accountants who are not 
certified public accountants may also be exempt as professional 
employees if they actually perform work which requires the consistent 
exercise of discretion and judgment and otherwise meet the tests 
prescribed in the definition of ``professional'' employee. Accounting 
clerks, junior accountants, and other accountants, on the other hand, 
normally perform a great deal of routine work which is not an essential 
part of and necessarily incident to any professional work which they may 
do. Where these facts are found such accountants are not exempt. The 
title ``Junior Accountant,'' however, is not determinative of failure to 
qualify for exemption any more than the title ``Senior Accountant'' 
would necessarily imply that the employee is exempt.
    (g)(1) A requisite for exemption as a teacher is the condition that 
the employee is ``employed and engaged'' in this activity as a teacher 
in the school system, or educational establishment or institution by 
which he is employed.
    (2) ``Employed and engaged as a teacher'' denotes employment and 
engagement in the named specific occupational category as a requisite 
for exemption. Teaching consists of the activities of teaching, 
tutoring, instructing, lecturing, and the like in the activity of 
imparting knowledge. Teaching personnel may include the following 
(although not necessarily limited to): Regular academic teachers' 
teachers of kindergarten or nursery school pupils or of gifted or 
handicapped children; teachers of skilled and semiskilled trades and 
occupations; teachers engaged in automobile driving instruction; 
aircraft flight instructors; home economics teachers; and vocal or 
instrumental music instructors. Those faculty members who are engaged as 
teachers but also spend a considerable amount of their time in 
extracurricular activities such as coaching athletic teams or acting as 
moderators or advisers in such areas as drama, forensics, or journalism 
are engaged in teaching. Such activities are a recognized part of the 
school's responsibility in contributing to the educational development 
of the student.
    (3) Within the public schools of all the States, certificates, 
whether conditional or unconditional, have become a uniform requirement 
for employment as a teacher at the elementary and secondary levels. The 
possession of an elementary or secondary teacher's certificate provide a 
uniform means of identifying the individuals contemplated as being 
within the scope of the exemption provided by the statutory language and 
defined in Sec. 541.3(a)(3) with respect to all teachers employed in 
public schools and those private schools who possess State certificates. 
However, the private schools of all the States are not uniform in 
requiring a certificate for employment as an elementary or secondary 
school teacher and teacher's certificates are not generally necessary 
for employment as a teacher in institutions of higher education or other 
educational establishments which rely on other qualification standards. 
Therefore, a teacher who is not certified but is engaged in teaching in 
such a school may be considered for exemption provided that such teacher 
is employed as a teacher by the employing school or school system and 
satisfies the other requirements of Sec. 541.3.
    (4) Whether certification is conditional or unconditional will not 
affect the determination as to employment within the scope of the 
exemption contemplated by this section. There is no standard terminology 
within the States referring to the different kinds of certificates. The 
meanings of such

[[Page 212]]

labels as permanent, standard, provisional, temporary, emergency, 
professional, highest standard, limited, and unlimited vary widely. For 
the purpose of this section, the terminology affixed by the particular 
State in designating the certificates does not affect the determination 
of the exempt status of the individual.

[38 FR 11390, May 7, 1973. Redesignated and amended at 57 FR 46744, Oct. 
9, 1992.]



Sec. 541.302  Artistic professions.

    (a) The requirements concerning the character of the artistic type 
of professional work are contained in Sec. 541.3(a)(2). Work of this 
type is original and creative in character in a recognized field of 
artistic endeavor (as opposed to work which can be produced by a person 
endowed with general manual or intellectual ability and training), and 
the result of which depends primarily on the invention, imagination, or 
talent of the employee.
    (b) The work must be ``in a recognized field of artistic endeavor.'' 
This includes such fields as music, writing, the theater, and the 
plastic and graphic arts.
    (c)(1) The work must be original and creative in character, as 
opposed to work which can be produced by a person endowed with general 
manual or intellectual ability and training. In the field of music there 
should be little difficulty in ascertaining the application of the 
requirement. Musicians, composers, conductors, soloists, all are engaged 
in original and creative work within the sense of this definition. In 
the plastic and graphic arts the requirement is, generally speaking, met 
by painters who at most are given the subject matter of their painting. 
It is similarly met by cartoonists who are merely told the title or 
underlying concept of a cartoon and then must rely on their own creative 
powers to express the concept. It would not normally be met by a peron 
who is employed as a copyist, or as an ``animator'' of motion-picture 
cartoons, or as a retoucher of photographs since it is not believed that 
such work is properly described as creative in character.
    (2) In the field of writing the distinction is perhaps more 
difficult to draw. Obviously the requirement is met by essayists or 
novelists or scenario writers who choose their own subjects and hand in 
a finished piece of work to their employers (the majority of such 
persons are, of course, not employees but self-employed). The 
requirement would also be met, generally speaking, by persons holding 
the more responsible writing positions in advertising agencies.
    (d) Another requirement is that the employee be engaged in work 
``the result of which depends primarily on the invention, imagination, 
or talent of the employee.'' This requirement is easily met by a person 
employed as an actor, or a singer, or a violinist, or a short-story 
writer. In the case of newspaper employees the distinction here is 
similar to the distinction observed above in connection with the 
requirement that the work be ``original and creative in character.'' 
Obviously the majority of reporters do work which depends primarily on 
intelligence, diligence, and accuracy. It is the minority whose work 
depends primarily on ``invention, imaging, or talent.'' On the other 
hand, this requirement will normally be met by actors, musicians, 
painters, and other artists.
    (e)(1) The determination of the exempt or nonexempt status of radio 
and television announcers as professional employees has been relatively 
difficult because of the merging of the artistic aspects of the job with 
the commercial. There is considerable variation in the type of work 
performed by various announcers, ranging from predominantly routine to 
predominantly exempt work. The wide variation in earnings as between 
individual announcers, from the highly paid ``name'' announcer on a 
national network who is greatly in demand by sponsors to the staff 
announcer paid a comparatively small salary in a small station, 
indicates not only great differences in personality, voice and manner, 
but also in some inherent special ability or talent which, while 
extremely difficult to define, is nevertheless real.
    (2) The duties which many announcers are called upon to perform 
include: Functioning as a master of ceremonies; playing dramatic, 
comedy, or straight

[[Page 213]]

parts in a program; interviewing; conducting farm, fashion, and home 
economics programs; covering public events, such as sports programs, in 
which the announcer may be required to ad lib and describe current 
changing events; and acting as narrator and commentator. Such work is 
generally exempt. Work such as giving station identification and time 
signals, announcing the names of programs, and similar routine work is 
nonexempt work. In the field of radio entertainment as in other fields 
of artistic endeavor, the status of an employee as a bona fide 
professional under Sec. 541.3 is in large part dependent upon whether 
his duties are original and creative in character, and whether they 
require invention, imagination or talent. The determination of whether a 
particular announcer is exempt as a professional employee must be based 
upon his individual duties and the amount of exempt and nonexempt work 
performed, as well as his compensation.
    (f) The field of journalism also employs many exempt as well as many 
nonexempt employees under the same or similiar job titles. Newspaper 
writers and reporters are the principal categories of employment in 
which this is found.
    (1) Newspaper writers, with possible rare exceptions in certain 
highly technical fields, do not meet the requirements of 
Sec. 541.3(a)(1) for exemption as professional employees of the 
``learned'' type. Exemption for newspaper writers as professional 
employees is normally available only under the provisions for 
professional employees of the ``artistic'' type. Newspaper writing of 
the exempt type must, therefore, be ``predominantly original and 
creative in character.'' Only writing which is analytical, 
interpretative or highly individualized is considered to be creative in 
nature. (The writing of fiction to the extent that it may be found on a 
newspaper would also be considered as exempt work.) Newspaper writers 
commonly performing work which is original and creative within the 
meaning of Sec. 541.3 are editorial writers, columnists, critics, and 
``top-flight'' writers of analytical and interpretative articles.
    (2) The reporting of news, the rewriting of stories received from 
various sources, or the routine editorial work of a newspaper is not 
predominantly original and creative in character within the meaning of 
Sec. 541.3 and must be considered as nonexempt work. Thus, a reporter or 
news writer ordinarily collects facts about news events by 
investigation, interview, or personal observation and writes stories 
reporting these events for publication, or submits the facts to a 
rewrite man or other editorial employees for story preparation. Such 
work is nonexempt work. The leg man, the reporter covering a police 
beat, the reporter sent out under specific instructions to cover a 
murder, fire, accident, ship arrival, convention, sport event, etc., are 
normally performing duties which are not professional in nature within 
the meaning of the act and Sec. 541.3.
    (3) Incidental interviewing or investigation, when it is performed 
as an essential part of and is necessarily incident to an employee's 
professional work, however, need not be counted as nonexempt work. Thus, 
if a dramatic critic interviews an actor and writes a story around the 
interview, the work of interviewing him and writing the story would not 
be considered as nonexempt work. However, a dramatic critic who is 
assigned to cover a routine news event such as a fire or a convention 
would be doing nonexempt work since covering the fire or the convention 
would not be necessary and incident to his work as a dramatic critic.

[38 FR 11390, May 7, 1973. Redesignated at 57 FR 46744, Oct. 9, 1992]



Sec. 541.303  Computer related occupations under Public Law 101-583.

    (a) Pursuant to Public Law 101-583, enacted November 15, 1990, 
Sec. 541.3(a)(4) provides that computer systems analysts, computer 
programmers, software engineers, or other similarly skilled workers in 
the computer software field are eligible for exemption as professionals 
under section 13(a)(1) of the Act. Employees who qualify for this 
exemption are highly-skilled in computer systems analysis, programming, 
or related work in software functions. Employees who perform these types 
of work have varied job titles. Included

[[Page 214]]

among the more common job titles are computer programmer, systems 
analyst, computer systems analyst, computer programmer analyst, 
applications programmer, applications systems analyst, applications 
systems analyst/programmer, software engineer, software specialist, 
systems engineer, and systems specialist. These job titles are 
illustrative only and the list is not intended to be all-inclusive. 
Further, because of the wide variety of job titles applied to computer 
systems analysis and programming work, job titles alone are not 
determinative of the applicability of this exemption.
    (b) To be considered for exemption under Sec. 541.3(a)(4), an 
employee's primary duty must consist of one or more of the following:
    (1) The application of systems analysis techniques and procedures, 
including consulting with users, to determine hardware, software, or 
system functional specifications;
    (2) The design, development, documentation, analysis, creation, 
testing, or modification of computer systems or programs, including 
prototypes, based on and related to user or system design 
specifications;
    (3) The design, documentation, testing, creation or modification of 
computer programs related to machine operating systems; or
    (4) a combination of the aforementioned duties, the performance of 
which requires the same level of skills.
    (c) The exemption provided by Sec. 541.3(a)(4) applies only to 
highly-skilled employees who have achieved a level of proficiency in the 
theoretical and practical application of a body of highly-specialized 
knowledge in computer systems analysis, programming, and software 
engineering, and does not include trainees or employees in entry level 
positions learning to become proficient in such areas or to employees in 
these computer-related occupations who have not attained a level of 
skill and expertise which allows them to work independently and 
generally without close supervision. The level of expertise and skill 
required to qualify for this exemption is generally attained through 
combinations of education and experience in the field. While such 
employees commonly have a bachelor's or higher degree, no particular 
academic degree is required for this exemption, nor are there any 
requirements for licensure or certification, as is required for the 
exemption for the learned professions.
    (d) The exemption does not include employees engaged in the 
operation of computers or in the manufacture, repair, or maintenance of 
computer hardware and related equipment. Employees whose work is highly 
dependent upon, or facilitated by, the use of computers and computer 
software programs, e.g., engineers, drafters, and others skilled in 
computer-aided design software like CAD/CAM, but who are not in computer 
systems analysis and programming occupations, are also excluded from 
this exemption.
    (e) Employees in computer software occupations within the scope of 
this exemption, as well as those employees not within its scope, may 
also have managerial and administrative duties which may qualify the 
employees for exemption under Sec. 541.1 or Sec. 541.2 (see 
Secs. 541.205(c)(7) and 541.207(c)(7) of this subpart).

[57 FR 46744, Oct. 9, 1992; 57 FR 47163, Oct. 14, 1992]



Sec. 541.304  Primary duty.

    (a) For a general explanation of the term ``primary duty'' see the 
discussion of this term under ``executive'' in Sec. 541.103. See also 
the discussion under ``administrative'' in Sec. 541.206.
    (b) The ``primary duty'' of an employee as a teacher must be that of 
activity in the field of teaching. Mere certification by the State, or 
employment in a school will not suffice to qualify an individual for 
exemption within the scope of Sec. 541.3(a)(3) if the individual is not 
in fact both employed and engaged as a teacher (see Sec. 541.302(g)(2)). 
The words ``primary duty'' have the effect of placing major emphasis on 
the character of the employee's job as a whole. Therefore, employment 
and engagement in the activity of imparting knowledge as a primary duty 
shall be determinative with respect to employment within the meaning of 
the exemption as ``teacher'' in conjunction with the other requirements 
of Sec. 541.3.

[[Page 215]]



Sec. 541.305  Discretion and judgment.

    (a) Under Sec. 541.3 a professional employee must perform work which 
requires the consistent exercise of discretion and judgment in its 
performance.
    (b) A prime characteristic of professional work is the fact that the 
employee does apply his special knowledge or talents with discretion and 
judgment. Purely mechanical or routine work is not professional.



Sec. 541.306  Predominantly intellectual and varied.

    (a) Section 541.3 requires that the employee be engaged in work 
predominantly intellectual and varied in character as opposed to routine 
mental, manual, mechanical, or physical work. This test applies to the 
type of thinking which must be performed by the employee in question. 
While a doctor may make 20 physical examinations in the morning and 
perform in the course of his examinations essentially similar tests. It 
requires not only judgment and discretion on his part but a continual 
variety of interpretation of the tests to perform satisfactory work. 
Likewise, although a professional chemist may make a series of similar 
tests, the problems presented will vary as will the deductions to be 
made therefrom. The work of the true professional is inherently varied 
even though similar outward actions may be performed.
    (b) Another example of this is the professional medical technologist 
who performs complicated chemical, microscopic, and bacteriological 
tests and procedures. In a large medical laboratory or clinic, the 
technologist usually specializes in making several kinds of related 
tests in areas such as microbiology, parasitology, biochemistry, 
hematology, histology, cytology, and nuclear medical technology. The 
technologist also does the blood banking. He will also conduct tests 
related to the examination and treatment of patients, or do research on 
new drugs, or on the improvement of laboratory techniques, or teach and 
perform administrative duties. The simple, routine, and preliminary 
tests are generally performed by laboratory assistants or technicians. 
However, technologists who work in small laboratories may perform tasks 
that are performed by nonexempt employees in larger establishments. This 
type of activity will not necessarily be considered nonexempt (see 
Sec. 541.307).
    (c) On the other hand, X-ray technicians have only limited 
opportunity for the exercise of independent discretion and judgment, 
usually performing their duties under the supervision of a more highly 
qualified employee. The more complex duties of interpretation and 
judgment in this field are performed by obviously exempt professional 
employees.



Sec. 541.307  Essential part of and necessarily incident to.

    (a) Section 541.3(d), it will be noted, has the effect of including 
within the exempt work activities which are an essential part of and 
necessarily incident to the professional work described in Sec. 541.3 
(a) through (c). This provision recognizes the fact that there are 
professional employees whose work necessarily involves some of the 
actual routine physical tasks also performed by obviously nonexempt 
employees. For example, a chemist performing important and original 
experiments frequently finds it necessary to perform himself some of the 
most mental tasks in connection with the operation of his experiments, 
even though at times these menial tasks can be conveniently or properly 
assigned to laboratory assistants. See also the example of incidental 
interviewing or investigation in Sec. 541.303(a)(3).
    (b) It should be noted that the test of whether routine work is 
exempt work is different in the definition of ``professional'' from that 
in the definition of ``executive'' and ``administrative.'' Thus, while 
routine work will be exempt if it is ``directly and closely related'' to 
the performance of executive or administrative duties, work which is 
directly and closely related to the performance of the professional 
duties will not be exempt unless it is also ``an essential part of and 
necessarily incident to'' the professional work.
    (c) Section 541.3(d) takes into consideration the fact that there 
are teaching employees whose work necessarily involves some of the 
actual routine duties and physical tasks also performed

[[Page 216]]

by nonexempt employees. For example, a teacher may conduct his pupils on 
a field trip related to the classroom work of his pupils and in 
connection with the field trip engage in activities such as driving a 
school bus and monitoring the behavior of his pupils in public 
restraurants. These duties are an essential part of and necessarily 
incident to his job as teacher. However, driving a school bus each day 
at the beginning and end of the schools day to pick up and deliver 
pupils would not be exempt type work.



Sec. 541.308  Nonexempt work generally.

    (a) It has been the Divisions' experience that some employers 
erroneously believe that anyone employed in the field of accountancy, 
engineering, or other professional fields, will qualify for exemption as 
a professional employee by virtue of such employment. While there are 
many exempt employees in these fields, the exemption of individual 
depends upon his duties and other qualifications.
    (b) It is necessary to emphasize the fact that section 13(a)(1) 
exempts ``any employee employed in a bona fide * * * professional 
capacity.'' It does not exempt all employees of professional employers, 
or all employees in industries having large numbers of professional 
members, or all employees in any particular occupation. Nor does it 
exempt, as such those learning a profession. Moreover, it does not 
exempt persons with professional training, who are working in 
professional fields, but performing subprofessional or routine work. For 
example, in the field of library science there are large numbers of 
employees who are trained librarians but who, nevertheless, do not 
perform professional work or receive salaries commensurate with 
recognized professional status. The field of ``engineering'' has many 
persons with ``engineer'' titles, who are not professional engineers, as 
well as many who are trained in the engineering profession, but are 
actually working as trainees, junior engineers, or draftsmen.



Sec. 541.309  20-percent nonexempt work limitation.

    Time spent in nonexempt work, that is, work which is not an 
essential part of and necessarily incident to the exempt work, is 
limited to 20 percent of the time worked by the employee in the 
workweek.



Sec. 541.310  Trainees, professional.

    The exemption applies to an employee employed in a bona fide 
professional capacity and does not include trainees who are not actually 
performing the duties of a professional employee.



Sec. 541.311  Amount of salary or fees required.

    (a) Except as otherwise noted in paragraphs (b) and (c) of this 
section, compensation on a salary or fee basis at a rate of not less 
than $170 per week, exclusive of board, lodging or other facilities, is 
required for exemption as a ``professional employee.'' An employee will 
meet this requirement if paid a biweekly salary of $340, a semi monthly 
salary of $368.33 or a monthly salary of $736.67.
    (b) In Puerto Rico, the Virgin Islands, and American Samoa the 
salary test for exemption as a ``professional'' for other than employees 
of the Federal Government is $150 per week.
    (c) The payment of the compensation specified in paragraph (a) or 
(b) of this section is not a requisite for exemption in the case of 
employees exempted from this requirement by the proviso to 
Sec. 541.3(e), as explained in Sec. 541.314.
    (d) The payment of the required salary must be exclusive of board, 
lodging, or other facilities; that is, free and clear. On the other 
hand, the regulations in subpart A of this part do not prohibit the sale 
of such facilities to professional employees on a cash basis if they are 
negotiated in the same manner as similar transactions with other 
persons.

[38 FR 11390, May 7, 1973, as amended at 40 FR 7093, Feb. 19, 1975]

    Effective Date Note: Paragraphs (a) and (b) in Sec. 541.311 were 
revised at 46 FR 3015, Jan. 13, 1981. In accordance with the President's 
Memorandum of January 29, 1981 (46 FR 11227, Feb. 6, 1981), the 
effective date was postponed indefinitely at 46 FR 11972, Feb. 12, 1981.
    The text of paragraphs (a) and (b) set forth above remains in effect 
pending further action by the issuing agency. The text of the postponed 
regulation appears below.

[[Page 217]]

Sec. 541.311  Amount of salary or fees required.

    (a) Except as otherwise noted in paragraphs (b) and (c) of this 
section, compensation on a salary or fee basis at a rate of not less 
than $250 per week beginning February 13, 1981 and $280 per week 
beginning February 13, 1983, exclusive of board, lodging or other 
facilities, is required for exemption as a ``professional employee.'' 
For example, based on $280 a week, an employee will meet this 
requirement if paid a biweekly salary of $560, a semi-monthly salary of 
$606.67 or a monthly salary of $1,213.33.
    (b) In Puerto Rico, the Virgin Islands, and American Samoa the 
salary test for exemption as a ``professional'' for other than employees 
of the Federal Government is $225 per week beginning February 13, 1981 
and $250 per week beginning February 13, 1983.

                                * * * * *



Sec. 541.312  Salary basis.

    The salary basis of payment is explained in Sec. 541.118 in 
connection with the definition of ``executive.'' Pursuant to Public Law 
101-583, enacted November 15, 1990, payment ``on a salary basis'' is not 
a requirement for exemption in the case of those employees in computer-
related occupations, as defined in Sec. 541.3(a)(4) and Sec. 541.303, 
who otherwise meet the requirements of Sec. 541.3 and who are paid on an 
hourly basis if their hourly rate of pay exceeds 6\1/2\ times the 
minimum wage provided by section 6 of the Act.

[57 FR 46745, Oct. 9, 1992]



Sec. 541.313  Fee basis.

    (a) The requirements for exemption as a professional (or 
administrative) employee may be met by an employee who is compensated on 
a fee basis as well as by one who is paid on a salary basis.
    (b) Little or no difficulty arises in determining whether a 
particular employment arrangement involves payment on a fee basis. Such 
arrangements are characterized by the payment of an agreed sum for a 
single job regardless of the time required for its completion. These 
payments in a sense resemble piecework payments with the important 
distinction that generally speaking a fee payment is made for the kind 
of job which is unique rather than for a series of jobs which are 
repeated an indefinite number of times and for which payment on an 
identical basis is made over and over again. Payments based on the 
number of hours or days worked and not on the accomplishment of a given 
single task are not considered payments on a fee basis. The type of 
payment contemplated in the regulations in subpart A of this part is 
thus readily recognized.
    (c) The adequacy of a fee payment. Whether it amounts of payment at 
a rate of not less than $170 per week to a professional employee or at a 
rate of not less than $155 per week to an administrative employee can 
ordinarily be determined only after the time worked on the job has been 
determined. In determining whether payment is at the rate specified in 
the regulations in subpart A of this part the amount paid to the 
employee will be tested by reference to a standard workweek of 40 hours. 
Thus compliance will be tested in each case of a fee payment by 
determining whether the payment is at a rate which would amount to at 
least $170 per week to a professional employee or at a rate of not less 
than $155 per week to an administrative employee if 40 hours were 
worked.
    (d) The following examples will illustrate the principle stated 
above:
    (1) A singer receives $50 for a song on a 15-minute program (no 
rehearsal time is involved). Obviously the requirement will be met since 
the employee would earn $170 at this rate of pay in far less than 40 
hours.
    (2) An artist is paid $100 for a picture. Upon completion of the 
assignment, it is determined that the artist worked 20 hours. Since 
earnings at this rate would yield the artist $200 if 40 hours were 
worked, the requirement is met.
    (3) An illustrator is assigned the illustration of a pamphlet at a 
fee of $150. When the job is completed, it is determined that the 
employee worked 60 hours. If the employee worked 40 hours at this rate, 
the employee would have earned only $100. The fee payment of $150 for 
work which required 60 hours to complete therefore does not meet the 
requirement of payment at a rate of $170 per week and the employee must 
be considered nonexempt. It follows that if in the performance of this 
assignment the illustrator worked in excess of 40 hours in any week, 
overtime

[[Page 218]]

rates must be paid. Whether or not the employee worked in excess of 40 
hours in any week, records for such an employee would have to be kept in 
accordance with the regulations covering records for nonexempt employees 
(part 516 of this chapter).

[38 FR 11390, May 7, 1973, as amended at 40 FR 7093, Feb. 19, 1975]

    Effective Date Note: Paragraphs (c) and (d) in Sec. 541.313 were 
revised at 46 FR 3015, Jan. 13, 1981. In accordance with the President's 
Memorandum of January 29, 1981 (46 FR 11227, Feb. 6, 1981), the 
effective date was postponed indefinitely at 46 FR 11972, Feb. 12, 1981.
    The text of paragraphs (c) and (d) set forth above remains in effect 
pending further action by the issuing agency. The text of the postponed 
regulation appears below.

Sec. 541.313  Fee basis.

                                * * * * *

    (c) Examples of the adequacy of certain fee payments follow. For 
example, whether a fee payment amounts to payment at a rate of not less 
than $280 per week to a professional employee or at a rate of not less 
than $250 per week to an administrative employee can ordinarily be 
determined only after the time worked on the job has been determined. In 
determining whether payment is at the rate specified in the regulations 
in subpart A of this part the amount paid to the employee will be tested 
by reference to a standard workweek of 40 hours. Thus compliance will be 
tested in each case of a fee payment by determining whether the payment 
is at a rate which would amount to at least $280 per week to a 
professional employee or at a rate of not less then $250 per week to an 
administrative employee if 40 hours were worked.
    (d) The following examples will illustrate the principle stated 
above:
    (1) A singer receives $50 for a song on a 15-minute program (no 
rehearsal time is involved). Obviously the requirement will be met since 
the employee would earn $280 at this rate of pay in far less than 40 
hours.
    (2) An artist is paid $150 for a picture. Upon completion of the 
assignment, it is determined that the artist worked 20 hours. Since 
earnings at this rate would yield the artist $300 if 40 hours were 
worked, the requirement is met.
    (3) An isslustrator is assigned the illustration of a pamphlet at a 
fee of $180. When the job is completed, it is determined that the 
employee worked 60 hours. If the employee worked 40 hours at this rate, 
the employee would have earned only $120. The fee payment of $180 for 
work which required 60 hours to complete therefore does not meet the 
requirement of payment at a rate of $280 per week and the employee must 
be considered nonexempt. It follows that if in the performance of this 
assignment the illustrator worked in excess of 40 hours in any week, 
overtime rates must be paid. Whether or not the employee worked in 
excess of 40 hours in any week, records for such an employee would have 
to be kept in accordance with the regulations covering records for 
nonexempt employees (part 516 of this chapter).



Sec. 541.314  Exception for physicians, lawyers, and teachers.

    (a) A holder of a valid license or certificate permitting the 
practice of law or medicine or any of their branches, who is actually 
engaged in practicing the profession, or a holder of the requisite 
academic degree for the general practice of medicine who is engaged in 
an internship or resident program pursuant to the practice of his 
profession, or an employee employed and engaged as a teacher in the 
activity of imparting knowledge, is excepted from the salary or fee 
requirement. This exception applies only to the traditional professions 
of law, medicine, and teaching and not to employees in related 
professions which merely serve these professions.
    (b) In the case of medicine:
    (1) The exception applies to physicians and other practitioners 
licensed and practicing in the field of medical science and healing or 
any of the medical specialities practiced by physicians or 
practitioners. The term physicians means medical doctors including 
general practitioners and specialists, and osteopathic physicians 
(doctors of osteopathy). Other practitioners in the field of medical 
science and healing may include podiatrists (sometimes called 
chiropodists), dentists (doctors of dental medicine), optometrists 
(doctors of optometry or bachelors of science in optometry).
    (2) Physicians and other practitioners included in paragraph (b)(1) 
of this section, whether or not licensed to practice prior to 
commencement of an internship or resident program, are excepted from the 
salary or fee requirement during their internship or resident program, 
where such a training program is entered upon after the earning of the 
appropriate degree required

[[Page 219]]

for the general practice of their profession.
    (c) In the case of medical occupations, the exception from the 
salary or fee requirement does not apply to pharmacists, nurses, 
therapists, technologists, sanitarians, dietitians, social workers, 
psychologists, psychometrists, or other professions which service the 
medical profession.



Sec. 541.315  Special proviso for high salaried professional employees.

    (a) Except as otherwise noted in paragraph (b) of this section, the 
definition of ``professional'' contains a special proviso for employees 
who are compensated on a salary or fee basis at a rate of at least $250 
per week exclusive of board, lodging, or other facilities. Under this 
proviso, the requirements for exemption in Sec. 541.3 (a) through (e) 
will be deemed to be met by an employee who receives the higher salary 
or fees and whose primary duty consists of the performance of work 
requiring knowledge of an advanced type in a field of science or 
learning, or work as a teacher in the activity of imparting knowledge, 
which includes work requiring the consistent exercise of discretion and 
judgment, or consists of the performance of work requiring invention, 
imagination, or talent in a recognized field of artistic endeavor. Thus, 
the exemption will apply to highly paid employees employed either in one 
of the ``learned'' professions or in an ``artistic'' profession and 
doing primarily professional work. If an employee qualifies for 
exemption under this proviso, it is not necessary to test the employee's 
qualifications in detail under Sec. 541.3 (a) through (e).
    (b) In Puerto Rico, the Virgin Islands, and American Samoa the 
second proviso of Sec. 541.3(e) applies to those ``professional'' 
employees (other than employees of the Federal government) who are 
compensated on a salary or fee basis of not less than $200 per week.

[40 FR 7093, Feb. 19, 1975]

    Effective Date Note: Section 541.315 was revised at 46 FR 3015, Jan. 
13, 1981. In accordance with the President's Memorandum of January 29, 
1981 (46 FR 11227, Feb. 6, 1981), the effective date was postponed 
indefinitely at 46 FR 11972, Feb. 12, 1981.
    The text of Sec. 541.315 set forth above remains in effect pending 
further action by the issuing agency. The text of the postponed 
regulation appears below.

Sec. 541.315  Special proviso for high salaried professional employees.

    (a) Except as otherwise noted in paragraph (b) of this section, the 
definition of ``professional'' contains a special proviso for employees 
who are compensated on a salary or fee basis at a rate of at least $320 
per week beginning February 13, 1981 and $345 per week beginning 
February 13, 1983, exclusive of board, lodging, or other facilities. 
Under this proviso, the requirements for exemption in Sec. 541.3 (a) 
through (e) will be deemed to be met by an employee who receives the 
higher salary or fees and whose primary duty consists of the performance 
of work requiring knowledge of an advanced type in a field of science or 
learning, or work as a teacher in the activity of imparting knowledge, 
which includes work requiring the consistent exercise of discretion and 
judgment, or consists of the performance of work requiring invention, 
imagination, or talent in a recognized field of artistic endeavor. Thus, 
the exemption will apply to highly paid employees employed either in one 
of the ``learned'' professions or in an ``artistic'' profession and 
doing primarily professional work. If an employee qualifies for 
exemption under this proviso, it is not necessary to test the employee's 
qualifications in detail under Sec. 541.3 (a) through (e).
    (b) In Puerto Rico, the Virgin Islands, and American Samoa the 
second proviso of Sec. 541.3(e) applies to those ``professional'' 
employees (other than employees of the Federal Government) who are 
compensated on a salary or fee basis of not less than $260 per week 
beginning February 13, 1981 and $285 per week beginning February 13, 
1983.

          Employee Employed in the Capacity of Outside Salesman



Sec. 541.500  Definition of ``outside salesman.''

    Section 541.5 defines the term ``outside salesman'' as follows: The 
term ``employee employed * * * in the capacity of outside salesman'' in 
section 13(a)(1) of the Act shall mean any employee:
    (a) Who is employed for the purpose of and who is customarily and 
regularly engaged away from his employer's place or places of business 
in:
    (1) Making sales within the meaning of section 3(k) of the Act; or
    (2) Obtaining orders or contracts for services or for the use of 
facilities for

[[Page 220]]

which a consideration will be paid by the client or customer; and
    (b) Whose hours of work of a nature other than that described in 
paragraph (a) (1) or (2) of this section do not exceed 20 percent of the 
hours worked in the workweek by nonexempt employees of the employers: 
Provided, That work performed incidental to and in conjunction with the 
employee's own outside sales or soliciations, including incidental 
deliveries and collections, shall not be regarded as nonexempt work.



Sec. 541.501  Making sales or obtaining orders.

    (a) Section 541.5 requires that the employee be engaged in: (1) 
Making sales within the meaning of section 3(k) of the Act, or (2) 
obtaining orders or contracts for services or for the use of facilities.
    (b) Generally speaking, the divisions have interpreted section 3(k) 
of the Act to include the transfer of title to tangible property, and in 
certain cases, of tangible and valuable evidences of intangible 
property. Thus sales of automobiles, coffee, shoes, cigars, stocks, 
bonds, and insurance are construed as sales within the meaning of 
section 3(k). (Section 3(k) of the Act states that ``sale'' or ``sell'' 
includes any sale, exchange, contract to sell, consignment for sale, 
shipment for sale, or other disposition.)
    (c) It will be noted that the exempt work includes not only the 
sales of commodities, but also ``obtaining orders or contracts for 
services or for the use of facilities for which a consideration will be 
paid by the client or customer.'' ``Obtaining orders or * * * for the 
use of facilities'' includes the selling of time on the radio, the 
solicitation of advertising for newspapers and other periodicals and the 
solicitation of freight for railroads and other transportation agencies.
    (d) The word ``services'' extends the exemption as outside salesmen 
to employees who sell or take orders for a service, which is performed 
for the customer by someone other than the person taking the order. For 
example, it includes the salesman of a typewriter repair service who 
does not himself do the repairing. It also includes otherwise exempt 
outside salesmen who obtain orders for the laundering of the customer's 
own linens as well as those who obtain orders for the rental of the 
laundry's linens.
    (e) The inclusion of the word ``services'' is not intended to exempt 
persons who, in a very loose sense, are sometimes described as selling 
``services''. For example, it does not include persons such as 
servicemen even though they may sell the service which they themselves 
perform. Selling the service in such cases would be incidental to the 
servicing rather than the reverse. Nor does it include outside buyers, 
who in a very loose sense are sometimes described as selling their 
employer's ``service'' to the person from whom they obtain their goods. 
It is obvious that the relationship here is the reverse of that of 
salesman-customer.



Sec. 541.502  Away from his employer's place of business.

    (a) Section 541.5 requires that an outside salesman be customarily 
and regularly engaged ``away from his employer's place or places of 
business''. This requirement is based on the obvious connotation of the 
word ``outside'' in the term ``outside salesman''. It would obviously 
lie beyond the scope of the Administrator's authority that ``outside 
salesman'' should be construed to include inside salesmen. Inside sales 
and other inside work (except such as is directly in conjunction with 
and incidental to outside sales and solicitations, as explained in 
paragraph (b) of this section) is nonexempt.
    (b) Characteristically the outside salesman is one who makes his 
sales at his customer's place of business. This is the reverse of sales 
made by mail or telephone (except where the telephone is used merely as 
an adjunct to personal calls). Thus any fixed site, whether home or 
office, used by a salesman as a headquarters or for telephonic 
solicitation of sales must be construed as one of his employer's places 
of business, even though the employer is not in any formal sense the 
owner or tenant of the property. It should not be inferred from the 
foregoing that an outside salesman loses

[[Page 221]]

his exemption by displaying his samples in hotel sample rooms as he 
travels from city to city; these sample rooms should not be considered 
as his employer's places of business.



Sec. 541.503  Incidental to and in conjunction with sales work.

    Work performed ``incidental to and in conjunction with the 
employee's own outside sales or solicitation'' includes not only 
incidental deliveries and collections which are specifically mentioned 
in Sec. 541.5(b), but also any other work performed by the employee in 
furthering his own sales efforts. Work performed incidental to and in 
conjunction with the employee's own outside sales or solicitations would 
include, among other things, the writing of his sales reports, the 
revision of his own catalog, the planning of his itinerary and 
attendance at sales conferences.



Sec. 541.504  Promotion work.

    (a) Promotion work is one type of activity often performed by 
persons who make sales, which may or may not be exempt work, depending 
upon the circumstances under which it is performed. Promotion men are 
not exempt as ``outside salesmen.'' (This discussion relates solely to 
the exemption under Sec. 541.5, dealing with outside salesmen. Promotion 
men who receive the required salary and otherwise qualify may be exempt 
as administrative employees.) However, any promotional work which is 
actually performed incidental to and in conjunction with an employee's 
own outside sales or solicitations is clearly exempt work. On the other 
hand, promotional work which is incidental to sales made, or to be made, 
by someone else cannot be considered as exempt work. Many persons are 
engaged in certain combinations of sales and promotional work or in 
certain types of promotional work having some of the characteristics of 
sales work while lacking others. The types of work involved include 
activities in borderline areas in which it is difficult to determine 
whether the work is sales or promotional. Where the work is promotional 
in nature it is sometimes difficult to determine whether it is 
incidental to the employee's own sales work.
    (b)(1) Typically, the problems presented involve distribution 
through jobbers (who employ their own salesmen) or through central 
warehouses of chainstore organizations or cooperative retail buying 
associations. A manufacturer's representative in such cases visits the 
retailer, either alone or accompanied by the jobber's salesman. In some 
instances the manufacturer's representative may sell directly to the 
retailer; in others, he may urge the retailer to buy from the jobber.
    (2) This manufacturer's representative may perform various types of 
promotional activities such as putting up displays and posters, removing 
damaged or spoiled stock from the merchant's shelves or rearranging the 
merchandise. Such persons can be considered salesmen only if they are 
actually employed for the purpose of and are engaged in making sales or 
contracts. To the extent that they are engaged in promotional activities 
designed to stimulate sales which will be made by someone else the work 
must be considered nonexempt. With such variations in the methods of 
selling and promoting sales each case must be decided upon its facts. In 
borderline cases the test is whether the person is actually engaged in 
activities directed toward the consummation of his own sales, at least 
to the extent of obtaining a commitment to buy from the person to whom 
he is selling. If his efforts are directed toward stimulating the sales 
of his company generally rather than the consummation of his own 
specific sales his activities are not exempt. Incidental promotional 
activities may be tested by whether they are ``performed incidental to 
and in conjunction with the employee's own outside sales or 
solicitations'' or whether they are incidental to sales which will be 
made by someone else.
    (c)(1) A few illustrations of typical situations will be of 
assistance in determining whether a particular type of work is exempt or 
nonexempt under Sec. 541.5. One situation involves a manufacturer's 
representative who visits the retailer for the purpose of obtaining 
orders for his employer's product, but transmits any orders he obtains 
to the

[[Page 222]]

local jobber to be filled. In such a case the employee is performing 
sales work regardless of the fact that the order is filled by the jobber 
rather than directly by his own employer. The sale in this instance has 
been ``consummated'' in the sense that the salesman has obtained a 
commitment from the customer.
    (2) Another typical situation involves facts similar to those 
described in the preceding illustration with the difference that the 
jobber's salesman accompanies the representative of the company whose 
product is being sold. The order in this instance is taken by the 
jobber's salesman after the manufacturer's representative has done the 
preliminary work which may include arranging the stock, putting up a 
display or poster, and talking to the retailer for the purpose of 
getting him to place the order for the product with the jobber's 
salesman. In this instance the sale is consummated by the jobber's 
salesman. The work performed by the manufacturer's representative is not 
incidental to sales made by himself and is not exempt work. Moreover, 
even if in a particular instance the sale is consummated by the 
manufacturer's representative it is necessary to examine the nature of 
the work performed by the representative to determine whether his 
promotional activities are directed toward paving the way for his own 
present and future sales, or whether they are intended to stimulate the 
present and future sales of the jobber's salesman. If his work is 
related to his own sales it would be considered exempt work, while if it 
is directed toward stimulating sales by the jobber's representative it 
must be considered nonexempt work.
    (3) Another type of situation involves representatives employed by 
utility companies engaged in furnishing gas or electricity to consumers. 
In a sense these representatives are employed for the purpose of 
``selling'' the consumer an increased volume of the product of the 
utility. This ``selling'' is accomplished indirectly by persuading the 
consumer to purchase appliances which will result in a greater use of 
gas or electricity. Different methods are used by various companies. In 
some instances the utility representative after persuading the consumer 
to install a particular appliance may actually take the order for the 
appliance which is delivered from stock by his employer, or he may 
forward the order to an appliance dealer who then delivers it. In such 
cases the sales activity would be exempt, since it is directed at the 
consummation of a specific sale by the utility representative, the 
employer actually making the delivery in the one case, while in the 
other the sale is consummated in the sense that the representative 
obtains an order or commitment from the customer. In another type of 
situation the utility representative persuades the consumer to buy the 
appliance and he may even accompany the consumer to an appliance store 
where the retailer shows the appliance and takes the order. In such 
instances the utility representative is not an outside salesman since he 
does not consummate the sale or direct his efforts toward making the 
sale himself. Similarly, the utility representative is not exempt as an 
outside salesman if he merely persuades the consumer to purchase an 
appliance and the consumer then goes to an appliance dealer and places 
his order.
    (4) Still another type of situation involves the company 
representative who visits chainstores, arranges the merchandise on 
shelves, replenishes stock by replacing old with new merchandise, 
consults with the manager as to the requirements of the store, fills out 
a requisition for the quantity wanted and leaves it with the store 
manager to be transmitted to the central warehouse of the chainstore 
company which later ships the quantity requested. The arrangement of 
merchandise on the shelves or the replenishing of stock is not exempt 
work unless it is incidental to and in conjunction with the employee's 
own outside sales. Since the manufacturer's representative in this 
instance does not consummate the sale nor direct his efforts toward the 
consummation of a sale (the store manager often has no authority to buy) 
this work must be counted as nonexempt.

[[Page 223]]



Sec. 541.505  Driver salesmen.

    (a) Where drivers who deliver to an employer's customers the 
products distributed by the employer also perform functions concerned 
with the selling of such products, and questions arise as to whether 
such an employee is employed in the capacity of outside salesman, all 
the facts bearing on the content of the job as a whole must be 
scrutinized to determine whether such an employee is really employed for 
the purpose of making sales rather than for the service and delivery 
duties which he performs and, if so, whether he is customarily and 
regularly engaged in making sales and his performance of nonexempt work 
is sufficiently limited to come within the tolerance permitted by 
Sec. 541.5. The employee may qualify as an employee employed in the 
capacity of outside salesman if, and only if, the facts clearly indicate 
that he is employed for the purpose of making sales and that he is 
customarily and regularly engaged in such activity within the meaning of 
the act and this part. As in the case of outside salesmen whose jobs do 
not involve delivery of products to customers, the employee's chief duty 
or primary function must be the making of sales or the taking of orders 
if he is to qualify under the definition in Sec. 541.5. He must be a 
salesman by occupation. If he is, all work that he performs which is 
actually incidental to and in conjunction with his own sales effort is 
exempt work. All other work of such an employee is nonexempt work. A 
determination of an employee's chief duty or primary function must be 
made in terms of the basic character of the job as a whole. All of the 
duties performed by an employee must be considered. The time devoted to 
the various duties is an important, but not necessarily controlling, 
element.
    (b) Employees who may perform a combination of selling or sales 
promotion activities with product deliveries are employed in a number of 
industries. Distributors of carbonated beverages, beer, bottled water, 
food and dairy products of various kinds, cigars and other nonfood 
products commonly utilize such employees, variously known as routemen, 
route drivers, route salesmen, dealer salesmen, distributor salesmen, or 
driver salesmen. Some such emloyees deliver at retail to customers' 
homes; others deliver on wholesale routes to such customers as retail 
stores, restaurants, hospitals, hotels, taverns, and other business 
establishments. Whether such an employee qualifies as an outside 
salesman under the regulations depends, as stated in paragraph (a) of 
this section, on the content of the job as a whole and not on its title 
or designation or the kind of business in which the employer is engaged. 
Hearings in 1964 concerning the application of Sec. 541.5 to such 
employees demonstrated that there is great variation in the nature and 
extent of sales activity and its significance as an element of the job, 
as among drivers whose duties are performed with respect to different 
products or different industries and also among drivers engaged in the 
same industry in delivering products to different types of customers. In 
some cases the facts may make it plain that such an employee is employed 
for the purpose of making sales; in other cases the facts are equally 
clear that he is employed for another purpose. Thus, there is little 
question that a routeman who provides the only sales contact between the 
employer and the customers, who calls on customers and takes orders for 
products which he delivers from stock in his vehicle or procures and 
delivers to the customer on a later trip, and who receives compensation 
commensurate with the volume of products sold, is employed for the 
purpose of making sales. It is equally clear, on the other hand, that a 
routeman whose chief duty is to transport products sold by the employer 
through vending machines and to keep such machines stocked, in good 
operating condition, and in good locations, is not selling his 
employer's product or employed for the purpose of making sales but is 
employed for purposes which, although important to the promotion of 
sales to customers using the machines, plainly cannot characterize the 
employee as a salesman by occupation. In other cases there may be more 
difficulty in determining whether the employee is employed for the 
purpose of making sales within the meaning of this part. The facts in 
such cases must

[[Page 224]]

be weighed in the light of the principles stated in paragraph (a) of 
this section, giving due consideration to the factors discussed in 
subsequent paragraphs of this section.
    (c) One source of difficulty in determining the extent to which a 
route driver may actually be engaged in making sales arises from the 
fact that such a driver often calls on established customers day after 
day or week after week, delivering a quantity of his employer's products 
at each call. Plainly, such a driver is not making sales when he 
delivers orders to customers to whom he did not make the initial sale in 
amounts which are exactly or approximately prearranged by customer or 
contractual arrangement or in amounts specified by the customer and not 
significantly affected by solicitations of the customer by the 
delivering driver. Making such deliveries, as well as recurring 
deliveries the amounts of which are determined by the volume of sales by 
the customer since the previous delivery rather than by any sales effort 
of the driver, do not qualify the driver as an outside salesman nor are 
such deliveries and the work incident thereto directly to the making or 
soliciting of sales by the driver so as to be considered exempt work. On 
the other hand, route drivers are making sales when they actually obtain 
or solicit, at the stops on their routes, orders for their employer's 
products from persons who have authority to commit the customer for 
purchases. A driver who calls on new prospects for customers along his 
route and attempts to convince them of the desirability of accepting 
regular delivery of goods is likewise engaged in sales activity and is 
making sales to those from whom he obtains a commitment. Also, a driver 
salesman calling on established customers on his route, carrying an 
assortment of the articles which his employer sells, may be making sales 
by persuading regular customers to accept delivery of increased amounts 
of goods or of new products, even though the initial sale or agreement 
for delivery of the employer's products may have been made by someone 
else. Work which is performed incidental to and in conjunction with such 
sales activities will also be considered exempt work, provided such 
solicitation of the customer is frequent and regular. Incidental 
activities include loading the truck with the goods to be sold by the 
driver salesman, driving the truck, delivering the products sold, 
removing empty containers for return to the employer, and collecting 
payment for the goods delivered.
    (d) Neither delivery of goods sold by others nor sales promotion 
work as such constitutes making sales within the meaning of Sec. 541.5; 
delivery men and promotion men are not employed in the capacity of 
outside salesmen for purposes of section 13(a)(1) of the act although 
both delivery work and promotion work are exempt salesman as an incident 
to his own sales or efforts to sell. The distinction between the making 
of sales and the promotion of sales is explained in more detail in the 
discussion and illustrations contained in Sec. 541.504. Under the 
principles there stated a route driver, just as any other employee, must 
have as his chief duty and primary function the making of sales in the 
sense of obtaining and soliciting commitments to buy from the persons 
upon whom he calls if he is to qualify under the regulations as an 
employee employed in the capacity of outside salesman. For this reason, 
a route driver primarily engaged in making deliveries to his employer's 
customers and performing activities intended to promote sales by 
customers, including placing point-of-sale and other advertising 
materials, price stamping commodities, arranging merchandise on shelves 
or in coolers or cabinets, rotating stock according to date, and 
cleaning and otherwise servicing display cases, is not employed in the 
capacity of an outside salesman by reason of such work. Such work is 
nonexempt work for purposes of this part unless it is performed as an 
incident to or in conjunction with sales actually made by the driver to 
such customers. If the driver who performs such functions actually takes 
orders or obtains commitments from such customers for the products which 
he delivers, and the performance of the promotion work is in furtherance 
of his own sales efforts, his activities for that purpose in the 
customer's establishment would be exempt work.

[[Page 225]]

    (e) As indicated in paragraph (a) of this section, whether a route 
driver can qualify as an outside salesman depends on the facts which 
establish the content of his job as a whole. Accordingly, in borderline 
cases a determination of whether the driver is actually employed for the 
purpose of, is customarily and regularly engaged in, and has as his 
chief duty and primary function the making of sales, may involve 
consideration of such factors as a comparison of his duties with those 
of other employees engaged as (1) truckdrivers and (2) salesmen; 
possession of a salesman's or solicitor's license when such license is 
required by law or ordinances; presence or absence of customary or 
contractual prearrangements concerning amounts of products to be 
delivered; description of the employee's occupation in union contracts; 
the employer's specifications as to qualifications for hiring; sales 
training; attendance at sales conferences; method of payment; proportion 
of earnings directly attributable to sales effort; and other factors 
that may have a bearing on the relationship to sales of the employee's 
work. However, where it is clear that an employee performs nonexempt 
work in excess of the amount permitted by Sec. 541.5, he would be 
nonexempt in any event and consideration of such factors as the 
foregoing would not be pertinent.
    (f) The following examples will further illustrate the factual 
situations in which, under the principles discussed previously in this 
section, routemen engaged in recurrent deliveries of goods may qualify 
or may fail to qualify for exemption as outside salesmen.
    (1) A retail routeman who regularly calls on established retail 
customers to deliver goods of generally prearranged amounts and kinds 
may also exert considerable effort not only to keep such customers 
satisfied to continue their orders for such goods but also to make such 
customers aware of other products which he would like to sell to them 
and to offer to take orders for such products or for increased amounts 
of the products which he is already delivering to the customer. In 
addition, he may call at prospective retail customers' homes for the 
purpose of persuading such persons to order the goods which he sells. A 
routeman who customarily and regularly calls on customers for these 
purposes and takes orders from them for products which he delivers to 
them, in addition to those products for which delivery has been 
prearranged, who is in practical effect his employer's exclusive sales 
contact with such customers, and whose earnings are in large part 
directly attributable to sales made to such customers, will be 
considered to be employed in the capacity of outside salesman and within 
the exemption provided by section 13(a)(1) of the Act if he does not 
perform nonexempt work in excess of the tolerance permitted by 
Sec. 541.5.
    (2) A routeman who calls on retail stores which are among his 
employer's established customers may also qualify for exemption as an 
outside salesman notwithstanding the goods he delivers to them are of 
kinds and in amounts which are generally prearranged. Other facts may 
show that making sales is his chief duty and primary function and that 
he is customarily and regularly engaged in performing this function. 
Thus, such a routeman whose regular calls on established customers 
involve not only delivery of prearranged items but also active efforts 
to persuade such customers to continue or increase their orders for such 
goods and to solicit their orders for other kinds of products which he 
offers for sale, who also calls on retail stores which are prospective 
customers, talks to persons who are authorized to order goods for such 
stores, and solicits orders from them for the goods which he sells, and 
whose compensation is based primarily on the volume of sales 
attributable to his efforts, will be considered exempt as an outside 
salesman if he does not perform nonexempt work in excess of the 
tolerance permitted by Sec. 541.5.
    (3) If a routeman delivers goods to branch business establishments 
whose personnel have no authority to place orders or make commitments 
with respect to the kinds and amounts of such goods, and if the kinds 
and amounts of goods delivered are not determined pursuant to orders 
placed by the authorized personnel of the customer's

[[Page 226]]

enterprise as a result of sales solicitation by the routeman, it is 
clear that the routeman's calls on such branch establishments are not a 
part of the making of sales by him or incidental to sales made by him. 
If such work is his chief duty or primary function or if he spends a 
greater proportion of the workweek in such work than is allowed for 
nonexempt work under Sec. 541.5, such a routeman cannot qualify for 
exemption as an ``outside salesman''.
    (4) A routeman who delivers to supermarkets after the enterprise has 
been persuaded, by a salesman of the routeman's employer, to accept 
delivery of goods, and whose functions other than such deliveries are 
primarily to arrange merchandise, rotate stocks, place point-of-sale and 
other advertising materials, and engage in other activities which are 
intended to promote sales by the supermarkets of the goods he has 
delivered, is not employed primarily for the purpose of selling and is 
not customarily and regularly engaged in making sales. Rather, he is 
employed primarily to deliver goods and to perform activities in the 
supermarkets of a nature usually performed by store employees not 
employed as salesmen. Such a routeman is not employed in the capacity of 
outside salesman within the exemption provided by section 13(a)(1).
    (5) Some employees are engaged in a combination of activities 
involving delivery, the selling of services, and the performance of the 
services. For example, some drivers call on customers for the purpose of 
selling pesticides and, if a sale is consummated, applying the 
pesticides on the customer's property. Such employees, like those 
referred to in Sec. 541.501(e), are not exempt as outside salesmen. They 
are primarily engaged in delivery or service functions, not in outside 
selling.



Sec. 541.506  Nonexempt work generally.

    Nonexempt work is that work which is not sales work and is not 
performed incidental to and in conjunction with the outside sales 
activities of the employee. It includes outside activities like meter-
reading, which are not part of the sales process. Inside sales and all 
work incidental thereto are also nonexempt work. So is clerical 
warehouse work which is not related to the employee's own sales. 
Similarly, the training of other salesmen is not exempt as outside sales 
work, with one exception. In some concerns it is the custom for the 
salesman to be accompanied by the trainee while actually making sales. 
Under such circumstances it appears that normally the trainer-salesman 
and the trainee make the various sales jointly, and both normally 
receive a commission thereon. In such instances, since both are engaged 
in making sales, the work of both is considered exempt work. However, 
the work of a helper who merely assists the salesman in transporting 
goods or samples and who is not directly concerned with effectuating the 
sale is nonexempt work.



Sec. 541.507  20-percent limitation on nonexempt work.

    Nonexempt work in the definition of ``outside salesman'' is limited 
to ``20 percent of the hours worked in the workweek by nonexempt 
employees of the employer.'' The 20 percent is computed on the basis of 
the hours worked by nonexempt employees of the employer who perform the 
kind of nonexempt work performed by the outside salesman. If there are 
no employees of the employer performing such nonexempt work, the base to 
be taken is 40 hours a week, and the amount of nonexempt work allowed 
will be 8 hours a week.



Sec. 541.508  Trainees, outside salesmen.

    The exemption is applicable to an employee employed in the capacity 
of outside salesman and does not include employees training to become 
outside salesmen who are not actually performing the duties of an 
outside salesman (see also Sec. 541.506).

                            Special Problems



Sec. 541.600  Combination exemptions.

    (a) The divisions' position under the regulations in subpart A of 
this part permits the ``tacking'' of exempt work under one section of 
the regulations in subpart A to exempt work under another section of 
those regulations, so that a person who, for example, performs a 
combination of executive and

[[Page 227]]

professional work may qualify for exemption. In combination exemptions, 
however, the employee must meet the stricter of the requirements on 
salary and nonexempt work. For instance, if the employee performs a 
combination of an executive's and an outside salesman's function 
(regardless of which occupies most of his time) he must meet the salary 
requirement for executives. Also, the total hours of nonexempt work 
under the definition of ``executive'' together with the hours of work 
which would not be exempt if he were clearly an outside salesman, must 
not exceed either 20 percent of his own time or 20 percent of the hours 
worked in the workweek by the nonexempt employees of the employer, 
whichever is the smaller amount.
    (b) Under the principles in paragraph (a) of this section 
combinations of exemptions under the other sections of the regulations 
in subpart A of this part are also permissible. In short, under the 
regulations in subpart A, work which is ``exempt'' under one section of 
the regulations in subpart A will not defeat the exemption under any 
other section.



Sec. 541.601  Special provision for motion picture producing industry.

    Under Sec. 541.5a, the requirement that the employee be paid ``on a 
salary basis'' does not apply to an employee in the motion picture 
producing industry who is compensated at a base rate of at least $250 a 
week (exclusive of board, lodging, or other facilities). Thus, an 
employee in this industry who is otherwise exempt under Secs. 541.1, 
541.2, or Sec. 541.3 and who is employed at a base rate of at least $250 
a week is exempt if he is paid at least prorata (based on a week of not 
more than 6 days) for any week when he does not work a full workweek for 
any reason. Moreover, an otherwise exempt employee in this industry 
qualifies for exemption if he is employed at a daily rate under the 
following circumstances: (a) The employee is in a job category for which 
a weekly base rate is not provided and his daily base rate would yield 
at least $250 if 6 days were worked; or (b) the employee is in a job 
category having a weekly base rate of at least $250 and his daily base 
rate is at least one-sixth of such weekly base rate. The higher minimum 
salary tests will be effective on April 1, 1975.

[40 FR 7094, Feb. 19, 1975]

    Effective Date Note: Section 541.601 was revised at 46 FR 3016, Jan. 
13, 1981. In accordance with the President's Memorandum of January 29, 
1981 (46 FR 11227, Feb. 6, 1981), the effective date was postponed 
indefinitely at 46 FR 11972, Feb. 12, 1981.
    The text of Sec. 541.601 set forth above remains in effect pending 
further action by the issuing agency. The text of the postponed 
regulation appears below.

Sec. 541.601  Special provision for motion picture producing industry.

    Under Sec. 541.5a, the requirement that the employee be paid ``on a 
salary basis'' does not apply to an employee in the motion picture 
producing industry who is compensated at a base rate of at least $320 
per week beginning Febraury 13, 1981 and $345 per week beginning 
February 13, 1983 (exclusive of board, lodging, or other facilities). 
Thus, an employee in this industry who is otherwise exempt under 
Sec. 541.1, Sec. 541.2, or Sec. 541.3 and who is employed at a base rate 
of at least $320 per week beginning February 13, 1981 and $345 per week 
beginning February 13, 1983 is exempt if he is paid at least prorata 
(based on a week of not more than 6 days) for any week when he does not 
work a full workweek for any reason. Moreover, an otherwise exempt 
employee in this industry qualifies for exemption if he is employed at a 
daily rate under the following circumstances: (a) The employee is in a 
job category for which a weekly base rate is not provided and his daily 
base rate would yield at least $320 per week beginning February 13, 1981 
and $345 per week beginning February 13, 1983 if 6 days were worked; or 
(b) the employee is in a job category having a weekly base rate of at 
least $320 per week beginning February 13, 1983 and his daily base rate 
is at least one-sixth of such weekly base rate. The higher minimum 
salary tests will be effective on February 13, 1981, and February 13, 
1983, respectively.



Sec. 541.602  Special proviso concerning executive and administrative 
employees in multi-store retailing operations.

    (a) The tolerance of up to 40 percent of the employee's time which 
is allowed for nonexempt work performed by an executive or 
administrative employee of a retail or service establishment does not 
apply to employees of a multiunit retailing operation, such as a 
chainstore system or a retail establishment having one or more branch 
stores, who perform central functions

[[Page 228]]

for the organization in physically separated establishments such as 
warehouses, central office buildings or other central service units or 
by traveling from store to store. Nor does this special tolerance apply 
to employees who perform central office, warehousing, or service 
functions in a multi-unit retailing operation by reason of the fact that 
the space provided for such work is located in a portion or portions of 
the building in which the main retail or service establishment or 
another retail outlet of the organization is also situated. Such 
employees are subject to the 20-percent limitation on nonexempt work.
    (b) With respect to executive or administrative employees stationed 
in the main store of a multistore retailing operation who engage in 
activities (other than central office functions) which relate to the 
operations of the main store, and also to the operations of one or more 
physically separated units, such as branch stores, of the same retailing 
operation, the Divisions will, as an enforcement policy, assert no 
disqualification of such an employee for the section 13(a 1) exemption 
by reason of nonexempt activities if the employee devotes less than 40 
percent of his time to such nonexempt activities. This enforcement 
policy would apply, for example, in the case of a buyer who works in the 
main store of a multistore retailing operation and who not only manages 
the millinery department in the main store, but is also responsible for 
buying some or all of the merchandise sold in the millinery departments 
of the branch stores.

                Appendix to Part 541--Occupational Index

    Note: This index lists, for ease of reference, the sections of this 
part which refer to job titles. The user should note, however, that 
where job titles do appear in the illustrations in the text, they should 
not be construed to mean that employees holding such titles are either 
exempt or nonexempt or that they meet any one of the specific 
requirements for exemption.

Accountant, 541.302
Account executive, 541.201, 541.205
Actor, 541.303
Adjuster, 541.205
Advisory specialist, 541.205
Analyst, wage rate, 541.201, 541.205
Animator, 541.303
Announcer, radio, 541.303
Announcer, television, 541.303
Artist, 541.303, 541.313
Assistant, administrative, 541.201, 541.205, 541.207, 541.208
Assistant buyer, 541.105, 541.201, 541.205
Assistant, confidential, 541.201
Assistant, executive, 541.201
Assistant department head, 541.105
Assistant to general manager, 541.201
Assistant to president, 541.201, 541.207
Auditor, traveling, 541.201
Bookkeeper, 541.205, 541.207
Bookkeeper, head, 541.115
Broker, customers', 541.201, 541.205, 541.207
Buyer, 541.108, 541.201, 541.205, 541.207, 541.501, 541.602
Buyer, assistant, 541.105, 541.201, 541.205
Buyer, lease, 541.201
Buyer, outside, 541.501
Buyer, resident, 541.205
Carpenter, 541.119
Cartoonist, 541.303
Cashier, bank, 541.205
Checker, 541.108
Chemist, 541.302, 541.306, 541.307
Claim agent, 541.205
Clerk, 541.205
Clerk, accounting, 541.302
Clerk, chief, 541.115
Clerk, counter, 541.109
Clerk, shipping, 541.207
Columnist, 541.303
Company representative, 541.504
Comparison shopper, 541.207, 541.504
Composer, 541.303
Computer operator, 541.108, 541.207
Computer programer, 541.108, 541.205, 541.207, 541.302
Conductor, 541.303
Consultant, 541.205, 541.207, 541.208
Contact man, 541.201, 541.207
Copyist (motion picture), 541.303
Craftsman, 541.119
Credit manager, 541.201, 541.205, 541.207, 541.208
Delivery man, 541.505
Dentist, 541.314
Department head, assistant, 541.105
Dietitian, 541.202, 541.314
Doctor, 541.306, 541.314
Draftsman, 541.308
Dramatic critic, 541.303
Driver salesman, 541.505
Engineer, 541.302, 541.308
Engineer, junior, 541.308
Essayist, 541.303
Examiner, 541.108, 541.207
Executive secretary, 541.201
Financial consultant, 541.205
Foreign exchange consultant, 541.201
Foreman-cutter, 541.115
Foreman-examiner, 541.108
Foreman-fixer (hosiery), 541.115
Foreman-machine adjuster, 541.108
Foreman-``setup'' man, 541.108

[[Page 229]]

Foreman, construction, 541.104
Foreman, garment shop, 541.115
Foreman, installation, 541.104
Foreman, planer-mill, 541.115
Foreman, shipping room, 541.115
Foreman, warehouse, 541.115
Foreman, working, 541.115
Gang leader, 541.115
Gauger (oil company), 541.201
Group leader, 541.115
Grader, 541.207
Head bookkeeper, 541.115
Head shipper, 541.115
Illustrator, 541.313
Inside salesman, 541.502
Inspector, 541.108, 541.207
Inspector, insurance, 541.205
Insurance expert, 541.201
Interns, 541.314
Inventory man, traveling, 541.201
Investment consultant, 541.201
Jobber's representative, 541.504
Jobber's salesman, 541.504
Journalist, 541.303
Key punch operator, 541.207
Junior programer, 541.207
Labor relations consultant, 541.205
Labor relations director, 541.201
Lawyer, 541.302, 541.314
Legal stenographer, 541.302
Librarian, 541.308
Linotype operator, 541.119
Location manager, motion picture, 541.201
Lumber grader, 541.207
Machine shop supervisor, 541.105
Manager, branch, 541.113, 541.118
Manager, credit, 541.201, 541.205, 541.207, 541.208
Manager, cleaning establishment, 541.109
Manager, office, 541.115, 541.208
Manager, traffic, 541.208
Management consultant, 541.207, 541.208
Manufacturer's representative, 541.504
Mechanic, 541.119
Medical technologist, 541.203, 541.306
Methods engineer, 541.201
Mine superintendent, 541.109
Motion picture producing industry, employees in, 541.601
Musician, 541.303
Newspaper writer, 541.303
Novelist, 541.303
Nurse, 541.314
Office manager, 541.115, 541.208
Optometrist, 541.314
Organization planner, 541.201
Painter, 541.303
Personnel clerk, 541.205, 541.207
Personnel director, 541.201
Personnel manager, 541.205, 541.207
Pharmacist, 541.314
Physician, 541.306, 541.314
Physician, general practitioner, 541.314
Physician, intern, 541.314
Physician, osteopathic, 541.314
Physician, resident, 541.314
Planer-mill foreman, 541.115
Podiatrist, 541.314
Production control supervisor, 541.201
Programer trainee, 541.207
Promotion man, 541.201, 541.205, 541.504, 541.505
Psychologist, 541.202, 541.314
Psychometrist, 541.314
Purchasing agent, 541.201, 541.207
Radio announcer, 541.303
Ratesetter, 541.201
Registered nurse, 541.302
Reporter, 541.303
Representative, company, 541.504
Representative, jobber's, 541.504
Representative, manufacturer's, 541.504
Representative, utility, 541.504
Resident buyer, 541.205
Retail routeman, 541.505
Retoucher, photographic, 541.303
Route driver, 541.505
Routeman, 541.505
Routeman, retail, 541.505
Safety director, 541.201, 541.205
Salesman, dealer, 541.505
Salesman, distributor, 541.505
Salesman, driver, 541.505
Salesman, inside, 541.502
Salesman, jobber's, 541.504
Salesman, laundry, 541.501
Salesman, mail, 541.502
Salesman, route, 541.505
Salesman, telephone, 541.502
Salesman, typewriter repair, 541.501
Salesman, wholesale, 541.207
Salesman's helper, 541.506
Sales research expert, 541.201
Sanitarian, 541.314
School building manager, 541.202
School department head, 541.201
School lunch room manager, 541.202
School maintenance man, 541.202
School principal, 541.201
School superintendent, 541.201
School vice principal, 541.201
Secretary, 541.205
Secretary, executive, 541.201
Serviceman, 541.501
Shipper, head, 541.115
Shipping clerk, 541.207
Shipping room foreman, 541.115
Singer, 541.303, 541.313
Social worker, 541.202, 541.314
Statistician, 541.201, 541.205
Strawboss, 541.115
Supervisor, production control, 541.201
Tape librarian, 541.207
Tax consultant, 541.205
Tax expert, 541.201, 541.205
Teacher, 541.215, 541.300, 541.302, 541.304, 541.307, 541.315
Technologist, 541.314
Television announcer, 541.303
Teller, bank, 541.205, 541.207
Therapist, 541.314
Timekeeper, 541.108
Traffic manager, 541.208
Trainee, 541.116, 541.210, 541.308, 541.310, 541.506, 541.508

[[Page 230]]

Trainer-salesman, 541.506
Truck driver, 541.207, 541.505
Utility representative, 541.201, 541.504
Violinist, 541.303
Working foreman, 541.115
Working supervisor, 541.115
Writer, advertising, 541.303
Writer, fiction, 541.303
Writer, newspaper, 541.303
Writer, scenario, 541.303
Writer, short story, 541.303
X-ray technician, 541.306



PART 547--REQUIREMENTS OF A ``BONA FIDE THRIFT OR SAVINGS PLAN''--Table 
of Contents




Sec.
547.0  Scope and effect of part.
547.1  Essential requirements for qualifications.
547.2  Disqualifying provisions.
547.3  Petition for amendment of regulations in this part.

    Authority: Sec. 7, 52 Stat. 1063, as amended; 29 U.S.C. 207.

    Source: 19 FR 4864, Aug. 3, 1954, unless otherwise noted.



Sec. 547.0  Scope and effect of part.

    (a) The regulations in this part set forth the requirements of a 
``bona fide thrift or savings plan'' under section 7(e)(3)(b) of the 
Fair Labor Standards Act of 1938, as amended (hereinafter called the 
Act). In determining the total remuneration for employment which section 
7(e) of the Act requires to be included in the regular rate at which an 
employee is employed, it is not necessary to include any sums paid to or 
on behalf of such employee, in recognition of services performed by him 
during a given period, which are paid pursuant to a bona fide thrift or 
savings plan meeting the requirements set forth herein. In the 
formulation of these regulations due regard has been given to the 
factors and standards set forth in section 7(e)(3)(b) of the Act.
    (b) Where a thrift or savings plan is combined in a single program 
(whether in one or more documents) with a plan or trust for providing 
profit-sharing payments to employees, or with a plan or trust for 
providing old age, retirement, life, accident or health insurance or 
similar benefits for employees, contributions made by the employer 
pursuant to such thrift or savings plan may be excluded from the regular 
rate if the plan meets the requirements of the regulation in this part 
and the contributions made for the other purposes may be excluded from 
the regular rate if they meet the tests set forth in regulations. Part 
549, or the tests set forth in Interpretative Bulletin, part 778 of this 
chapter, Secs. 778.214 and 778.215, as the case may be.



Sec. 547.1  Essential requirements for qualifications.

    (a) A ``bona fide thrift or savings plan'' for the purpose of 
section 7(e)(3)(b) of the Act is required to meet all the standards set 
forth in paragraphs (b) through (f) of this section and must not contain 
the disqualifying provisions set forth in Sec. 547.2.
    (b) The thrift or savings plan constitutes a definite program or 
arrangement in writing, adopted by the employer or by contract as a 
result of collective bargaining and communicated or made available to 
the employees, which is established and maintained, in good faith, for 
the purpose of encouraging voluntary thrift or savings by employees by 
providing an incentive to employees to accumulate regularly and retain 
cash savings for a reasonable period of time or to save through the 
regular purchase of public or private securities.
    (c) The plan specifically shall set forth the category or categories 
of employees participating and the basis of their eligibility. 
Eligibility may not be based on such factors as hours of work, 
production, or efficiency of the employees' Provided, however, That 
hours of work may be used to determine eligibility of part-time or 
casual employees.
    (d) The amount any employee may save under the plan shall be 
specified in the plan or determined in accordance with a definite 
formula specified in the plan, which formula may be based on one or more 
factors such as the straight-time earnings or total earnings, base rate 
of pay, or length of service of the employee.
    (e) The employer's total contribution in any year may not exceed 15 
percent of the participating employees' total earnings during that year. 
In addition, the employer's total contribution in

[[Page 231]]

any year may not exceed the total amount saved or invested by the 
participating employees during that year: Provided, however, That a plan 
permitting a greater contribution may be submitted to the Administrator 
and approved by him as a ``bona fide thrift or savings plan'' within the 
meaning of section 7(e)(3)(b) of the Act if:
    (1) The plan meets all the other standards of this section;
    (2) The plan contains none of the disqualifying factors enumerated 
in Sec. 547.2;
    (3) The employer's contribution is based to a substantial degree 
upon retention of savings; and
    (4) The amount of the employer's contribution bears a reasonable 
relationship to the amount of savings retained and the period of 
retention.
    (f) The employer's contributions shall be apportioned among the 
individual employees in accordance with a definite formula or method of 
calculation specified in the plan, which formula or method of 
calculation is based on the amount saved or the length of time the 
individual employee retains his savings or investment in the plan: 
Provided, That no employee's share determined in accordance with the 
plan may be diminished because of any other remuneration received by 
him.

(Approved by the Office of Management and Budget under control number 
1215-0019)

[19 FR 4864, Aug. 3, 1954, as amended at 47 FR 145, Jan. 5, 1982]



Sec. 547.2  Disqualifying provisions.

    (a) No employee's participation in the plan shall be on other than a 
voluntary basis.
    (b) No employee's wages or salary shall be dependent upon or 
influenced by the existence of such thrift or savings plan or the 
employer's contributions thereto.
    (c) The amounts any employee may save under the plan, or the amounts 
paid by the employer under the plan may not be based upon the employee's 
hours of work, production or efficiency.



Sec. 547.3  Petition for amendment of regulations in this part.

    Any person wishing a revision of any of the terms of the regulations 
in this part may submit in writing to the Administrator a petition 
setting forth the changes desired and the reasons for proposing them. If 
upon the inspection of the petition, the Administrator believes that 
reasonable cause for amendment of the regulations in this part is set 
forth, the Administrator will either schedule a hearing with due notice 
to interested parties, or will make other provision for affording 
interested parties an opportunity to present their views, either in 
support of or in opposition to the proposed changes.



PART 548--AUTHORIZATION OF ESTABLISHED BASIC RATES FOR COMPUTING OVERTIME 
PAY--Table of Contents




                     Subpart A--General Regulations

Sec.
548.1  Scope and effect of regulations.
548.2  General conditions.
548.3  Authorized basic rates.
548.4  Application for authorization of a ``basic rate.''
548.5  Petition for amendment.

                       Subpart B--Interpretations

                              Introduction

548.100  Introductory statement.

                      Requirements for a Basic Rate

548.200  Requirements.

                         Authorized Basic Rates

548.300  Introductory statement.
548.301  Salaried employees.
548.302  Average earnings for period other than a workweek.
548.303  Average earnings for each type of work.
548.304  Excluding value of lunches furnished.
548.305  Excluding certain additions to wages.
548.306  Average earnings for year or quarter year preceding the current 
          quarter.

                     Rates Authorized on Application

548.400  Procedures.
548.401  Agreement or understanding.
548.402  Applicable overtime provisions.
548.403  Description of method of calculation.
548.404  Kinds of jobs or employees.
548.405  Representative period.

                       Computation of Overtime Pay

548.500  Methods of computation.
548.501  Overtime hours based on nonstatutory standards.

[[Page 232]]

548.502  Other payments.

    Authority: Sec. 7, 52 Stat. 1063, as amended; 29 U.S.C. 207, unless 
otherwise noted.