[Title 29 CFR ]
[Code of Federal Regulations (annual edition) - July 1, 2008 Edition]
[From the U.S. Government Printing Office]



[[Page i]]



          29


          Parts 500 to 899

                         Revised as of July 1, 2006


          Labor
          
          


________________________

          Containing a codification of documents of general 
          applicability and future effect

          As of July 1, 2006
          With Ancillaries
                    Published by
                    Office of the Federal Register
                    National Archives and Records
                    Administration
                    A Special Edition of the Federal Register

[[Page ii]]

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                            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........     819
      Table of CFR Titles and Chapters........................     821
      Alphabetical List of Agencies Appearing in the CFR......     839
      List of CFR Sections Affected...........................     849

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

                     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, 2006), 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 
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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 
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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 
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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

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and Finding Aids. This volume contains the Parallel Table of Statutory 
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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

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

July 1, 2006.

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                               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, 2006.

    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).

    For this volume, Carol A. Conroy was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Frances D. McDonald, assisted by Alomha S. Morris.

[[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

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          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..........          69
510             Implementation of the minimum wage 
                    provisions of the 1989 amendments to the 
                    Fair Labor Standards Act in Puerto Rico.          69
511             Wage order procedure for American Samoa.....          91
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]

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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..............         146
530             Employment of homeworkers in certain 
                    industries..............................         149
531             Wage payments under the Fair Labor Standards 
                    Act of 1938.............................         161
536             Area of production..........................         174
541             Defining and delimiting the exemptions for 
                    executive, administrative, professional, 
                    computer and outside sales employees....         175
547             Requirements of a ``Bona fide thrift or 
                    savings plan''..........................         200
548             Authorization of established basic rates for 
                    computing overtime pay..................         201
549             Requirements of a ``Bona fide profit-sharing 
                    plan or trust''.........................         216
550             Defining and delimiting the term ``Talent 
                    fees''..................................         218
551             Local delivery drivers and helpers; wage 
                    payment plans...........................         219
552             Application of the Fair Labor Standards Act 
                    to domestic service.....................         223
553             Application of the Fair Labor Standards Act 
                    to employees of State and local 
                    governments.............................         228
570             Child labor regulations, orders and 
                    statements of interpretation............         252
575             Waiver of child labor provisions for 
                    agricultural employment of 10 and 11 
                    year old minors in hand harvesting of 
                    short season crops......................         294
578             Minimum wage and overtime violations--civil 
                    money penalties.........................         300
579             Child labor violations--civil money 
                    penalties...............................         302
580             Civil money penalties--procedures for 
                    assessing and contesting penalties......         306
697             Industries in American Samoa................         310
    SUBCHAPTER B--STATEMENTS OF GENERAL POLICY OR INTERPRETATION NOT 
                     DIRECTLY RELATED TO REGULATIONS
775             General.....................................         314
776             Interpretative bulletin on the general 
                    coverage of the wage and hours 
                    provisions of the Fair Labor Standards 
                    Act of 1938.............................         314

[[Page 7]]

778             Overtime compensation.......................         353
779             The Fair Labor Standards Act as applied to 
                    retailers of goods or services..........         408
780             Exemptions applicable to agriculture, 
                    processing of agricultural commodities, 
                    and related subjects under the Fair 
                    Labor Standards Act.....................         510
782             Exemption from maximum hours provisions for 
                    certain employees of motor carriers.....         583
783             Application of the Fair Labor Standards Act 
                    to employees employed as seamen.........         599
784             Provisions of the Fair Labor Standards Act 
                    applicable to fishing and operations on 
                    aquatic products........................         615
785             Hours worked................................         641
786             Miscellaneous exemptions....................         653
788             Forestry or logging operations in which not 
                    more than eight employees are employed..         654
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..........         658
790             General statement as to the effect of the 
                    Portal-to-Portal Act of 1947 on the Fair 
                    Labor Standards Act of 1938.............         663
791             Joint employment relationship under Fair 
                    Labor Standards Act of 1938.............         688
793             Exemption of certain radio and television 
                    station employees from overtime pay 
                    requirements under section 13(b)(9) of 
                    the Fair Labor Standards Act............         689
794             Partial overtime exemption for employees of 
                    wholesale or bulk petroleum distributors 
                    under section 7(b)(3) of the Fair Labor 
                    Standards Act...........................         695
                        SUBCHAPTER C--OTHER LAWS
801             Application of the Employee Polygraph 
                    Protection Act of 1988..................         715
825             The Family and Medical Leave Act of 1993....         744
                  SUBCHAPTER D--GARNISHMENT OF EARNINGS
870             Restriction on garnishment..................         811
871-899         [Reserved]

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                        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 transportation 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;
    (iii) The putative employee's investment in equipment or materials 
required for the task, or the putative employee's employment of other 
workers;

[[Page 16]]

    (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 
economic dependency, is a qualitative rather than quantitative analysis. 
The factors are not to be applied as a

[[Page 17]]

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 labor 
contracting activities solely on behalf of such farm labor contractor 
and not as an independent farm labor

[[Page 18]]

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 piece of work, usually of short duration. Generally, 
employment, which is

[[Page 19]]

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.
    (2) A man-day means any day during which an employee performs 
agricultural labor for not less than one (1)

[[Page 20]]

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.
    (i) Seed production exemption. (1) Any person whose principal 
occupation or

[[Page 21]]

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 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

[[Page 22]]

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
    (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:

[[Page 23]]

    (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 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

[[Page 24]]

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;
    (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

[[Page 25]]

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

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

[[Page 26]]

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 Sec. Sec. 500.75 
and 500.76 of these regulations. As with the written disclosure 
statements under Sec. Sec. 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.



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

[[Page 27]]

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 
Sec. Sec. 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 Sec. Sec. 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 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 
Sec. Sec. 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

[[Page 28]]

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 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

[[Page 29]]

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 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

[[Page 30]]

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]

                    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

[[Page 31]]

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 identification 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).



   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

[[Page 32]]

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 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

[[Page 33]]

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 automobiles 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.
    (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

[[Page 34]]

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 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]

[[Page 35]]

    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 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, 
accessories, 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.

[[Page 36]]

    (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.
    (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.

[[Page 37]]

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 
readily 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 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.

[[Page 38]]

    (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; designed 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 heaters of the following types be used:
    (A) Exhaust heaters. Any type of exhaust heater in which the engine 
exhaust gases are conducted into or 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

[[Page 39]]

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 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,

[[Page 40]]

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 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

[[Page 41]]

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 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 Sec. Sec. 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

[[Page 42]]

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 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.

[[Page 43]]



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 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;

[[Page 44]]

    (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 
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

[[Page 45]]

(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 Sec. Sec. 500.220 through 500.262 and the 
official record shall be maintained in accordance with Sec. Sec. 
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 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

[[Page 46]]

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 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:

[[Page 47]]

    (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. 500.210 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.
    (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.

[[Page 48]]

    (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; 71 FR 16665, Apr. 3, 2006]

               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.

                            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

[[Page 49]]

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 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

[[Page 50]]

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.
    (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.

[[Page 51]]

    (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 Sec. Sec. 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 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

[[Page 52]]

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 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

[[Page 53]]

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.

                         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

[[Page 54]]

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 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.

[[Page 55]]



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 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.

[[Page 56]]



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 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

[[Page 57]]

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 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

[[Page 58]]

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 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

[[Page 59]]

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 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-

[[Page 60]]

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 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 Sec. Sec. 
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

[[Page 61]]

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 official who issued the determination, at the Wage and 
Hour Division address appearing on the determination notice, no later 
than thirty (30) days after issuance of the notice referred to in Sec. 
501.32.
    (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 official 
who issued the determination, at the Wage and Hour Division address 
appearing on the determination notice, 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.

[52 FR 20527, June 1, 1987, as amended at 71 FR 16665, Apr. 3, 2006]

[[Page 62]]

                            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 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 
proceeding. The allowance of such deferment and the duration thereof 
shall be at the discretion of the

[[Page 63]]

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 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.

[[Page 64]]



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 
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.

[[Page 65]]



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 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

[[Page 66]]

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.
    (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

[[Page 67]]

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 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.

[[Page 68]]

    (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 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)

[[Page 69]]

(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.



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

[[Page 70]]

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 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

[[Page 71]]

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-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.

[[Page 72]]



                 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 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

[[Page 73]]

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 National Archives and Records Administration (NARA). 
For information on the availability of this material at NARA, call 202-
741-6030, or go to: http://www.archives.gov/federal--register/code--of--
federal--regulations/ibr--locations.html. 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, as amended at 69 
FR 18803, Apr. 9, 2004]



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 minimum wage phase-in schedule for that employer. (See 
Sec. 510.10, above).
    (c) Where an industry 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 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

[[Page 74]]

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 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

[[Page 75]]

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.
    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.

[[Page 76]]

 
               ...........         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.
               ...........         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.

[[Page 77]]

 
               ...........         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.
                       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.

[[Page 78]]

 
               ...........         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.
               ...........         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.

[[Page 79]]

 
               ...........         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.
                       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.

[[Page 80]]

 
               ...........         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.
               ...........         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.

[[Page 81]]

 
               ...........         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.
               ...........         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.

[[Page 82]]

 
               ...........         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 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.

[[Page 83]]

    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.
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.

[[Page 84]]

 
                       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.
               ...........         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.

[[Page 85]]

 
               ...........         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.
               ...........         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.

[[Page 86]]

 
               ...........         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.
               ...........         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.

[[Page 87]]

 
                       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.
                       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.

[[Page 88]]

 
                       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.
               ...........         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.

[[Page 89]]

 
               ...........         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.
               ...........         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.

[[Page 90]]

 
                       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.

------------------------------------------------------------------------
              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.

[[Page 91]]

 
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                                 A[ntilde]asco.
3                                 Arecibo.
3                                 Arroyo.
3                                 Barceloneta.
3                                 Barranquitas.
3                                 Bayamon.
3                                 Cabo Rojo.
3                                 Caguas.
3                                 Camuy.
2                                 Canovanas.
3                                 Carolina.
3                                 Cata[ntilde]o.
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                                 Pe[ntilde]uelas.
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.
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.

[[Page 92]]

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.

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

[[Page 93]]

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 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.

[[Page 94]]


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 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:

[[Page 95]]

    (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 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

[[Page 96]]

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 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

[[Page 97]]

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 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,

[[Page 98]]

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 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

[[Page 99]]

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 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

[[Page 100]]

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.

                     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.

[[Page 101]]

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
516.34.....................................................    1215.0175
------------------------------------------------------------------------


[52 FR 24896, July 1, 1987, as amended at 71 FR 16665, Apr. 3, 2006]



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

[[Page 102]]

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 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

[[Page 103]]

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 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:


[[Page 104]]


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 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.

[[Page 105]]



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 in which the employee is employed both in 
agriculture and in connection with livestock auction operations:

[[Page 106]]

    (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) except 
paragraphs (a) (5) through (9) and, in addition, the following:

[[Page 107]]

    (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 guaranteed 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 Sec. Sec. 
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.

               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.

    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 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

[[Page 114]]

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 requesting 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]



               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 and responsibility 
delegated to him/her by the Secretary 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

[[Page 120]]

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, 
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-

[[Page 121]]

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 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

[[Page 122]]

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.
    (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

[[Page 123]]

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 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

[[Page 124]]

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]



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?
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?

[[Page 125]]

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-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

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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 Sec. Sec. 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 
Sec. Sec. 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.



                          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.

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    (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.
    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,

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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:
    (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

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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).



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

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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 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

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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 
Sec. Sec. 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.



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.

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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 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,

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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.
    (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

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    (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;
    (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;

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    (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 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

[[Page 136]]

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]



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.
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.

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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.
    (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.

[[Page 138]]

    (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 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

[[Page 139]]

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 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,

[[Page 140]]

    (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 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;

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    (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 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.).

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    (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 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

[[Page 143]]

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 satisfied 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.)



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

[[Page 144]]

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.



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

[[Page 145]]

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 guardian 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 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

[[Page 146]]

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 such other functions as may be desired by the Administrator.

                           PART 527 [RESERVED]



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.

[[Page 147]]

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 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

[[Page 148]]

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 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.

[[Page 149]]

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.

    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)

[[Page 150]]

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; 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.

[[Page 151]]

    (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 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

[[Page 152]]

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 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.

[[Page 153]]

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;
    (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

[[Page 154]]

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 Sec. Sec. 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, 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

[[Page 155]]

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 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

[[Page 156]]

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) 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

[[Page 157]]

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 Sec. Sec. 530.204 or 530.205 of this 
subpart if the Administrator finds all of the following:
    (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.

[[Page 158]]



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.



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

[[Page 159]]

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.



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

[[Page 160]]

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 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.

[[Page 161]]

    (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.



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.

                        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.

[[Page 162]]

              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 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

[[Page 163]]

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 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;

[[Page 164]]

    (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 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.



                        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

[[Page 165]]

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, the regulations, or the interpretations announced by the 
Administrator should be taken to override or nullify the provisions 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

[[Page 166]]

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 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

[[Page 167]]

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 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

[[Page 168]]

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 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

[[Page 169]]

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 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

[[Page 170]]

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 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

[[Page 171]]

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.



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

[[Page 172]]

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 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.

[[Page 173]]

    (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.



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

[[Page 174]]

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 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.
536.1-536.2 [Reserved]
536.3 ``Area of production'' as used in section 13(b)(14) of the Fair 
          Labor Standards Act.

    Authority: Sec. 13(a)(17), 52 Stat. 1067, as amended, sec. 9, 75 
Stat. 71, as amended, sec. 204(b), 80 Stat. 835; 29 U.S.C. 213(b)(14).

    Source: 27 FR 400, Jan. 13, 1962, unless otherwise noted.



Sec. Sec. 536.1-536.2   [Reserved]



Sec. 536.3  ``Area of production'' as used in section 13(b)(14) 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(b)(14) 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 175]]

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))

[27 FR 400, Jan. 13, 1962, as amended at 71 FR 16666, Apr. 3, 2006]



PART 541_DEFINING AND DELIMITING THE EXEMPTIONS FOR EXECUTIVE, 
ADMINISTRATIVE, PROFESSIONAL, COMPUTER AND OUTSIDE SALES EMPLOYEES
--Table of Contents




                      Subpart A_General Regulations

Sec.
541.0 Introductory statement.
541.1 Terms used in regulations.
541.2 Job titles insufficient.
541.3 Scope of the section 13(a)(1) exemptions.
541.4 Other laws and collective bargaining agreements.

                      Subpart B_Executive Employees

541.100 General rule for executive employees.
541.101 Business owner.
541.102 Management.
541.103 Department or subdivision.
541.104 Two or more other employees.
541.105 Particular weight.
541.106 Concurrent duties.

                   Subpart C_Administrative Employees

541.200 General rule for administrative employees.
541.201 Directly related to management or general business operations.
541.202 Discretion and independent judgment.
541.203 Administrative exemption examples.
541.204 Educational establishments.

                    Subpart D_Professional Employees

541.300 General rule for professional employees.
541.301 Learned professionals.
541.302 Creative professionals.
541.303 Teachers.
541.304 Practice of law or medicine.

                      Subpart E_Computer Employees

541.400 General rule for computer employees.
541.401 Computer manufacture and repair.
541.402 Executive and administrative computer employees.

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                    Subpart F_Outside Sales Employees

541.500 General rule for outside sales employees.
541.501 Making sales or obtaining orders.
541.502 Away from employer's place of business.
541.503 Promotion work.
541.504 Drivers who sell.

                      Subpart G_Salary Requirements

541.600 Amount of salary required.
541.601 Highly compensated employees.
541.602 Salary basis.
541.603 Effect of improper deductions from salary.
541.604 Minimum guarantee plus extras.
541.605 Fee basis.
541.606 Board, lodging or other facilities.

           Subpart H_Definitions And Miscellaneous Provisions

541.700 Primary duty.
541.701 Customarily and regularly.
541.702 Exempt and nonexempt work.
541.703 Directly and closely related.
541.704 Use of manuals.
541.705 Trainees.
541.706 Emergencies.
541.707 Occasional tasks.
541.708 Combination exemptions.
541.709 Motion picture producing industry.
541.710 Employees of public agencies.

    Authority: 29 U.S.C. 213; Public Law 101-583, 104 Stat. 2871; 
Reorganization Plan No. 6 of 1950 (3 CFR 1945-53 Comp. p. 1004); 
Secretary's Order No. 4-2001 (66 FR 29656).

    Source: 69 FR 22260, Apr. 23, 2004, unless otherwise noted.



                      Subpart A_General Regulations



Sec. 541.0  Introductory statement.

    (a) Section 13(a)(1) of the Fair Labor Standards Act, as amended, 
provides an exemption from the Act's minimum wage and overtime 
requirements for 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 an outside 
sales employee, 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. Section 13(a)(17) of the Act provides an 
exemption from the minimum wage and overtime requirements for computer 
systems analysts, computer programmers, software engineers, and other 
similarly skilled computer employees.
    (b) The requirements for these exemptions are contained in this part 
as follows: executive employees, subpart B; administrative employees, 
subpart C; professional employees, subpart D; computer employees, 
subpart E; outside sales employees, subpart F. Subpart G contains 
regulations regarding salary requirements applicable to most of the 
exemptions, including salary levels and the salary basis test. Subpart G 
also contains a provision for exempting certain highly compensated 
employees. Subpart H contains definitions and other miscellaneous 
provisions applicable to all or several of the exemptions.
    (c) 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 an outside sales employee under section 13(a)(1) 
of the Act. The equal pay provisions in section 6(d) of the Fair Labor 
Standards Act are administered and enforced by the United States Equal 
Employment Opportunity Commission.



Sec. 541.1  Terms used in regulations.

    Act means the Fair Labor Standards Act of 1938, as amended.
    Administrator means the Administrator of the Wage and Hour Division, 
United States Department of Labor. The Secretary of Labor has delegated 
to the Administrator the functions vested in the Secretary under 
sections 13(a)(1) and 13(a)(17) of the Fair Labor Standards Act.



Sec. 541.2  Job titles insufficient.

    A job title alone is insufficient to establish the exempt status of 
an employee. The exempt or nonexempt status of any particular employee 
must be determined on the basis of whether the employee's salary and 
duties meet the

[[Page 177]]

requirements of the regulations in this part.



Sec. 541.3  Scope of the section 13(a)(1) exemptions.

    (a) The section 13(a)(1) exemptions and the regulations in this part 
do not apply to manual laborers or other ``blue collar'' workers who 
perform work involving repetitive operations with their hands, physical 
skill and energy. Such nonexempt ``blue collar'' employees gain the 
skills and knowledge required for performance of their routine manual 
and physical work through apprenticeships and on-the-job training, not 
through the prolonged course of specialized intellectual instruction 
required for exempt learned professional employees such as medical 
doctors, architects and archeologists. Thus, for example, non-management 
production-line employees and non-management employees in maintenance, 
construction and similar occupations such as carpenters, electricians, 
mechanics, plumbers, iron workers, craftsmen, operating engineers, 
longshoremen, construction workers and laborers are entitled to minimum 
wage and overtime premium pay under the Fair Labor Standards Act, and 
are not exempt under the regulations in this part no matter how highly 
paid they might be.
    (b)(1) The section 13(a)(1) exemptions and the regulations in this 
part also do not apply to police officers, detectives, deputy sheriffs, 
state troopers, highway patrol officers, investigators, inspectors, 
correctional officers, parole or probation officers, park rangers, fire 
fighters, paramedics, emergency medical technicians, ambulance 
personnel, rescue workers, hazardous materials workers and similar 
employees, regardless of rank or pay level, who perform work such as 
preventing, controlling or extinguishing fires of any type; rescuing 
fire, crime or accident victims; preventing or detecting crimes; 
conducting investigations or inspections for violations of law; 
performing surveillance; pursuing, restraining and apprehending 
suspects; detaining or supervising suspected and convicted criminals, 
including those on probation or parole; interviewing witnesses; 
interrogating and fingerprinting suspects; preparing investigative 
reports; or other similar work.
    (2) Such employees do not qualify as exempt executive employees 
because their primary duty is not management of the enterprise in which 
the employee is employed or a customarily recognized department or 
subdivision thereof as required under Sec. 541.100. Thus, for example, 
a police officer or fire fighter whose primary duty is to investigate 
crimes or fight fires is not exempt under section 13(a)(1) of the Act 
merely because the police officer or fire fighter also directs the work 
of other employees in the conduct of an investigation or fighting a 
fire.
    (3) Such employees do not qualify as exempt administrative employees 
because their primary duty is not the performance of work directly 
related to the management or general business operations of the employer 
or the employer's customers as required under Sec. 541.200.
    (4) Such employees do not qualify as exempt professionals because 
their primary duty is not the performance of work requiring knowledge of 
an advanced type in a field of science or learning customarily acquired 
by a prolonged course of specialized intellectual instruction or the 
performance of work requiring invention, imagination, originality or 
talent in a recognized field of artistic or creative endeavor as 
required under Sec. 541.300. Although some police officers, fire 
fighters, paramedics, emergency medical technicians and similar 
employees have college degrees, a specialized academic degree is not a 
standard prerequisite for employment in such occupations.



Sec. 541.4  Other laws and collective bargaining agreements.

    The Fair Labor Standards Act provides minimum standards that may be 
exceeded, but cannot be waived or reduced. Employers must comply, for 
example, with any Federal, State or municipal laws, regulations or 
ordinances establishing a higher minimum wage or lower maximum workweek 
than those established under the Act. Similarly, employers, on their own 
initiative or

[[Page 178]]

under a collective bargaining agreement with a labor union, are not 
precluded by the Act from providing a wage higher than the statutory 
minimum, a shorter workweek than the statutory maximum, or a higher 
overtime premium (double time, for example) than provided by the Act. 
While collective bargaining agreements cannot waive or reduce the Act's 
protections, nothing in the Act or the regulations in this part relieves 
employers from their contractual obligations under collective bargaining 
agreements.



                      Subpart B_Executive Employees



Sec. 541.100  General rule for executive employees.

    (a) The term ``employee employed in a bona fide executive capacity'' 
in section 13(a)(1) of the Act shall mean any employee:
    (1) Compensated on a salary basis at a rate of not less than $455 
per week (or $380 per week, if employed in American Samoa by employers 
other than the Federal Government), exclusive of board, lodging or other 
facilities;
    (2) Whose primary duty is management of the enterprise in which the 
employee is employed or of a customarily recognized department or 
subdivision thereof;
    (3) Who customarily and regularly directs the work of two or more 
other employees; and
    (4) Who has the authority to hire or fire other employees or whose 
suggestions and recommendations as to the hiring, firing, advancement, 
promotion or any other change of status of other employees are given 
particular weight.
    (b) The phrase ``salary basis'' is defined at Sec. 541.602; 
``board, lodging or other facilities'' is defined at Sec. 541.606; 
``primary duty'' is defined at Sec. 541.700; and ``customarily and 
regularly'' is defined at Sec. 541.701.



Sec. 541.101  Business owner.

    The term ``employee employed in a bona fide executive capacity'' in 
section 13(a)(1) of the Act also includes any employee who owns at least 
a bona fide 20-percent equity interest in the enterprise in which the 
employee is employed, regardless of whether the business is a corporate 
or other type of organization, and who is actively engaged in its 
management. The term ``management'' is defined in Sec. 541.102. The 
requirements of Subpart G (salary requirements) of this part do not 
apply to the business owners described in this section.



Sec. 541.102  Management.

    Generally, ``management'' includes, but is not limited to, 
activities such as interviewing, selecting, and training of employees; 
setting and adjusting their rates of pay and hours of work; directing 
the work of employees; maintaining production or sales records for use 
in supervision or control; appraising employees' productivity and 
efficiency for the purpose of recommending promotions or other changes 
in status; handling employee complaints and grievances; disciplining 
employees; planning the work; determining the techniques to be used; 
apportioning the work among the employees; determining the type of 
materials, supplies, machinery, equipment 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 and security of the employees or the property; planning and 
controlling the budget; and monitoring or implementing legal compliance 
measures.



Sec. 541.103  Department or subdivision.

    (a) The phrase ``a customarily recognized department or 
subdivision'' is intended to distinguish between a mere collection of 
employees assigned from time to time to a specific job or series of jobs 
and a unit with permanent status and function. A customarily recognized 
department or subdivision must have a permanent status and a continuing 
function. For example, a large employer's human resources department 
might have subdivisions for labor relations, pensions and other 
benefits, equal employment opportunity, and personnel management, each 
of which has a permanent status and function.
    (b) When an enterprise has more than one establishment, the employee 
in charge of each establishment may be considered in charge of a 
recognized subdivision of the enterprise.

[[Page 179]]

    (c) A recognized department or subdivision need not be physically 
within the employer's establishment and may move from place to place. 
The mere fact that the employee works in more than one location does not 
invalidate the exemption if other factors show that the employee is 
actually in charge of a recognized unit with a continuing function in 
the organization.
    (d) Continuity of the same subordinate personnel is not essential to 
the existence of a recognized unit with a continuing function. An 
otherwise exempt employee will not lose the exemption merely because the 
employee draws and supervises workers from a pool or supervises a team 
of workers drawn from other recognized units, if other factors are 
present that indicate that the employee is in charge of a recognized 
unit with a continuing function.



Sec. 541.104  Two or more other employees.

    (a) To qualify as an exempt executive under Sec. 541.100, the 
employee must customarily and regularly direct the work of two or more 
other employees. The phrase ``two or more other employees'' means two 
full-time employees or their equivalent. One full-time and two half-time 
employees, for example, are equivalent to two full-time employees. Four 
half-time employees are also equivalent.
    (b) The supervision can be distributed among two, three or more 
employees, but each such employee must customarily and regularly direct 
the work of two or more other full-time employees or the equivalent. 
Thus, for example, a department with five full-time nonexempt workers 
may have up to two exempt supervisors if each such supervisor 
customarily and regularly directs the work of two of those workers.
    (c) An employee who merely assists the manager of a particular 
department and supervises two or more employees only in the actual 
manager's absence does not meet this requirement.
    (d) Hours worked by an employee cannot be credited more than once 
for different executives. Thus, a shared responsibility for the 
supervision of the same two employees in the same department does not 
satisfy this requirement. However, a full-time employee who works four 
hours for one supervisor and four hours for a different supervisor, for 
example, can be credited as a half-time employee for both supervisors.



Sec. 541.105  Particular weight.

    To determine whether an employee's suggestions and recommendations 
are given ``particular weight,'' factors to be considered include, but 
are not limited to, whether it is part of the employee's job duties to 
make such suggestions and recommendations; the frequency with which such 
suggestions and recommendations are made or requested; and the frequency 
with which the employee's suggestions and recommendations are relied 
upon. Generally, an executive's suggestions and recommendations must 
pertain to employees whom the executive customarily and regularly 
directs. It does not include an occasional suggestion with regard to the 
change in status of a co-worker. An employee's suggestions and 
recommendations may still be deemed to have ``particular weight'' even 
if a higher level manager's recommendation has more importance and even 
if the employee does not have authority to make the ultimate decision as 
to the employee's change in status.



Sec. 541.106  Concurrent duties.

    (a) Concurrent performance of exempt and nonexempt work does not 
disqualify an employee from the executive exemption if the requirements 
of Sec. 541.100 are otherwise met. Whether an employee meets the 
requirements of Sec. 541.100 when the employee performs concurrent 
duties is determined on a case-by-case basis and based on the factors 
set forth in Sec. 541.700. Generally, exempt executives make the 
decision regarding when to perform nonexempt duties and remain 
responsible for the success or failure of business operations under 
their management while performing the nonexempt work. In contrast, the 
nonexempt employee generally is directed by a supervisor to perform the 
exempt work or performs the exempt work for defined time periods. An 
employee whose primary duty is ordinary production work or routine,

[[Page 180]]

recurrent or repetitive tasks cannot qualify for exemption as an 
executive.
    (b) For example, an assistant manager in a retail establishment may 
perform work such as serving customers, cooking food, stocking shelves 
and cleaning the establishment, but performance of such nonexempt work 
does not preclude the exemption if the assistant manager's primary duty 
is management. An assistant manager can supervise employees and serve 
customers at the same time without losing the exemption. An exempt 
employee can also simultaneously direct the work of other employees and 
stock shelves.
    (c) In contrast, a relief supervisor or working supervisor whose 
primary duty is performing nonexempt work on the production line in a 
manufacturing plant does not become exempt merely because the nonexempt 
production line employee occasionally has some responsibility for 
directing the work of other nonexempt production line employees when, 
for example, the exempt supervisor is unavailable. Similarly, an 
employee whose primary duty is to work as an electrician is not an 
exempt executive even if the employee also directs the work of other 
employees on the job site, orders parts and materials for the job, and 
handles requests from the prime contractor.



                   Subpart C_Administrative Employees



Sec. 541.200  General rule for administrative employees.

    (a) The term ``employee employed in a bona fide administrative 
capacity'' in section 13(a)(1) of the Act shall mean any employee:
    (1) Compensated on a salary or fee basis at a rate of not less than 
$455 per week (or $380 per week, if employed in American Samoa by 
employers other than the Federal Government), exclusive of board, 
lodging or other facilities;
    (2) Whose primary duty is the performance of office or non-manual 
work directly related to the management or general business operations 
of the employer or the employer's customers; and
    (3) Whose primary duty includes the exercise of discretion and 
independent judgment with respect to matters of significance.
    (b) The term ``salary basis'' is defined at Sec. 541.602; ``fee 
basis'' is defined at Sec. 541.605; ``board, lodging or other 
facilities'' is defined at Sec. 541.606; and ``primary duty'' is 
defined at Sec. 541.700.



Sec. 541.201  Directly related to management or general business 
operations.

    (a) To qualify for the administrative exemption, an employee's 
primary duty must be the performance of work directly related to the 
management or general business operations of the employer or the 
employer's customers. The phrase ``directly related to the management or 
general business operations'' refers to the type of work performed by 
the employee. To meet this requirement, an employee must perform work 
directly related to assisting with the running or servicing of the 
business, as distinguished, for example, from working on a manufacturing 
production line or selling a product in a retail or service 
establishment.
    (b) Work directly related to management or general business 
operations includes, but is not limited to, work in functional areas 
such as tax; finance; accounting; budgeting; auditing; insurance; 
quality control; purchasing; procurement; advertising; marketing; 
research; safety and health; personnel management; human resources; 
employee benefits; labor relations; public relations, government 
relations; computer network, internet and database administration; legal 
and regulatory compliance; and similar activities. Some of these 
activities may be performed by employees who also would qualify for 
another exemption.
    (c) An employee may qualify for the administrative exemption if the 
employee's primary duty is the performance of work directly related to 
the management or general business operations of the employer's 
customers. Thus, for example, employees acting as advisers or 
consultants to their employer's clients or customers (as tax experts or 
financial consultants, for example) may be exempt.

[[Page 181]]



Sec. 541.202  Discretion and independent judgment.

    (a) To qualify for the administrative exemption, an employee's 
primary duty must include the exercise of discretion and independent 
judgment with respect to matters of significance. 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 ``matters of significance'' refers to the level of importance or 
consequence of the work performed.
    (b) The phrase ``discretion and independent judgment'' must be 
applied in the light of all the facts involved in the particular 
employment situation in which the question arises. Factors to consider 
when determining whether an employee exercises discretion and 
independent judgment with respect to matters of significance include, 
but are not limited to: whether the employee has authority to formulate, 
affect, interpret, or implement management policies or operating 
practices; whether the employee carries out major assignments in 
conducting the operations of the business; whether the employee performs 
work that affects business operations to a substantial degree, even if 
the employee's assignments are related to operation of a particular 
segment of the business; whether the employee has authority to commit 
the employer in matters that have significant financial impact; whether 
the employee has authority to waive or deviate from established policies 
and procedures without prior approval; whether the employee has 
authority to negotiate and bind the company on significant matters; 
whether the employee provides consultation or expert advice to 
management; whether the employee is involved in planning long- or short-
term business objectives; whether the employee investigates and resolves 
matters of significance on behalf of management; and whether the 
employee represents the company in handling complaints, arbitrating 
disputes or resolving grievances.
    (c) The exercise of discretion and independent judgment implies that 
the employee has authority to make an independent choice, free from 
immediate direction or supervision. However, employees can exercise 
discretion and independent judgment even if their decisions or 
recommendations are reviewed at a higher level. Thus, the term 
``discretion and independent judgment'' does not require that the 
decisions made by an employee 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. For example, 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 superiors before it is submitted to the 
client.
    (d) An employer's volume of business may make it necessary to employ 
a number of employees to perform the same or similar work. The fact that 
many employees perform identical work or work of the same relative 
importance does not mean that the work of each such employee does not 
involve the exercise of discretion and independent judgment with respect 
to matters of significance.
    (e) The exercise of discretion and independent judgment must be more 
than the use of skill in applying well-established techniques, 
procedures or specific standards described in manuals or other sources. 
See also Sec. 541.704 regarding use of manuals. The exercise of 
discretion and independent judgment also does not include clerical or 
secretarial work, recording or tabulating data, or performing other 
mechanical, repetitive, recurrent or routine work. An employee who 
simply tabulates data is not exempt, even if labeled as a 
``statistician.''

[[Page 182]]

    (f) An employee does not exercise discretion and independent 
judgment with respect to matters of significance merely because the 
employer will experience financial losses if the employee fails to 
perform the job properly. For example, a messenger who is entrusted with 
carrying large sums of money does not exercise discretion and 
independent judgment with respect to matters of significance even though 
serious consequences may flow from the employee's neglect. Similarly, an 
employee who operates very expensive equipment does not exercise 
discretion and independent judgment with respect to matters of 
significance merely because improper performance of the employee's 
duties may cause serious financial loss to the employer.



Sec. 541.203  Administrative exemption examples.

    (a) Insurance claims adjusters generally meet the duties 
requirements for the administrative exemption, whether they work for an 
insurance company or other type of company, if their duties include 
activities such as interviewing insureds, witnesses and physicians; 
inspecting property damage; reviewing factual information to prepare 
damage estimates; evaluating and making recommendations regarding 
coverage of claims; determining liability and total value of a claim; 
negotiating settlements; and making recommendations regarding 
litigation.
    (b) Employees in the financial services industry generally meet the 
duties requirements for the administrative exemption if their duties 
include work such as collecting and analyzing information regarding the 
customer's income, assets, investments or debts; determining which 
financial products best meet the customer's needs and financial 
circumstances; advising the customer regarding the advantages and 
disadvantages of different financial products; and marketing, servicing 
or promoting the employer's financial products. However, an employee 
whose primary duty is selling financial products does not qualify for 
the administrative exemption.
    (c) An employee who leads a team of other employees assigned to 
complete major projects for the employer (such as purchasing, selling or 
closing all or part of the business, negotiating a real estate 
transaction or a collective bargaining agreement, or designing and 
implementing productivity improvements) generally meets the duties 
requirements for the administrative exemption, even if the employee does 
not have direct supervisory responsibility over the other employees on 
the team.
    (d) An executive assistant or administrative assistant to a business 
owner or senior executive of a large business generally meets the duties 
requirements for the administrative exemption if such employee, without 
specific instructions or prescribed procedures, has been delegated 
authority regarding matters of significance.
    (e) Human resources managers who formulate, interpret or implement 
employment policies and management consultants who study the operations 
of a business and propose changes in organization generally meet the 
duties requirements for the administrative exemption. However, personnel 
clerks who ``screen'' applicants to obtain data regarding their minimum 
qualifications and fitness for employment generally do not meet the 
duties requirements for the administrative exemption. Such personnel 
clerks typically will reject all applicants who do not meet minimum 
standards for the particular job or for employment by the company. The 
minimum standards are usually set by the exempt human resources manager 
or other company officials, and the decision to hire from the group of 
qualified applicants who do meet the minimum standards is similarly made 
by the exempt human resources manager or other company officials. Thus, 
when the interviewing and screening functions are performed by the human 
resources manager or personnel manager who makes the hiring decision or 
makes recommendations for hiring from the pool of qualified applicants, 
such duties constitute exempt work, even though routine, because this 
work is directly and closely related to the employee's exempt functions.
    (f) Purchasing agents with authority to bind the company on 
significant

[[Page 183]]

purchases generally meet the duties requirements for the administrative 
exemption even if they must consult with top management officials when 
making a purchase commitment for raw materials in excess of the 
contemplated plant needs.
    (g) Ordinary inspection work generally does not meet the duties 
requirements for the administrative exemption. Inspectors normally 
perform specialized work along standardized lines involving well-
established techniques and procedures which may have been catalogued and 
described in manuals or other sources. Such inspectors rely on 
techniques and skills acquired by special training or experience. They 
have some leeway in the performance of their work but only within 
closely prescribed limits.
    (h) Employees usually called examiners or graders, such as employees 
that grade lumber, generally do not meet the duties requirements for the 
administrative exemption. Such employees usually perform work involving 
the comparison of products with established standards which are 
frequently catalogued. 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 a manual of standards does not 
convert the character of the work performed to exempt work requiring the 
exercise of discretion and independent judgment.
    (i) Comparison shopping performed by an employee of a retail store 
who merely reports to the buyer the prices at a competitor's store does 
not qualify for the administrative exemption. However, the buyer who 
evaluates such reports on competitor prices to set the employer's prices 
generally meets the duties requirements for the administrative 
exemption.
    (j) Public sector inspectors or investigators of various types, such 
as fire prevention or safety, building or construction, health or 
sanitation, environmental or soils specialists and similar employees, 
generally do not meet the duties requirements for the administrative 
exemption because their work typically does not involve work directly 
related to the management or general business operations of the 
employer. Such employees also do not qualify for the administrative 
exemption because their work involves the use of skills and technical 
abilities in gathering factual information, applying known standards or 
prescribed procedures, determining which procedure to follow, or 
determining whether prescribed standards or criteria are met.



Sec. 541.204  Educational establishments.

    (a) The term ``employee employed in a bona fide administrative 
capacity'' in section 13(a)(1) of the Act also includes employees:
    (1) Compensated for services on a salary or fee basis at a rate of 
not less than $455 per week (or $380 per week, if employed in American 
Samoa by employers other than the Federal Government) exclusive of 
board, lodging or other facilities, or on a salary basis which is at 
least equal to the entrance salary for teachers in the educational 
establishment by which employed; and
    (2) Whose primary duty is performing administrative functions 
directly related to academic instruction or training in an educational 
establishment or department or subdivision thereof.
    (b) The term ``educational establishment'' means an elementary or 
secondary school system, an institution of higher education or other 
educational institution. Sections 3(v) and 3(w) of the Act define 
elementary and secondary schools as those day or residential schools 
that 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 
also include nursery school programs in elementary education and junior 
college curriculums in secondary education. The term ``other educational 
establishment'' includes special schools for mentally or physically 
disabled or gifted children, regardless of any classification of such 
schools as elementary, secondary or higher. Factors relevant in 
determining whether post-secondary career programs are educational 
institutions include whether

[[Page 184]]

the school is licensed by a state agency responsible for the state's 
educational system or accredited by a nationally recognized accrediting 
organization for career schools. Also, for purposes of the exemption, no 
distinction is drawn between public and private schools, or between 
those operated for profit and those that are not for profit.
    (c) The phrase ``performing administrative functions directly 
related to academic instruction or training'' means work related to the 
academic operations and functions in a school rather than to 
administration along the lines of general business operations. Such 
academic administrative functions include operations directly in the 
field of education. Jobs relating to areas outside the educational field 
are not within the definition of academic administration.
    (1) Employees engaged in academic administrative functions include: 
the superintendent or other head of an elementary or secondary school 
system, and any assistants, responsible for 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; the principal and any vice-principals responsible for 
the operation of an elementary or secondary school; department heads in 
institutions of higher education responsible for the administration of 
the mathematics department, the English department, the foreign language 
department, etc.; academic counselors who perform work such as 
administering school testing programs, assisting students with academic 
problems and advising students concerning degree requirements; and other 
employees with similar responsibilities.
    (2) Jobs relating to building management and maintenance, jobs 
relating to the health of the students, and academic staff such as 
social workers, psychologists, lunch room managers or dietitians do not 
perform academic administrative functions. Although such work is not 
considered academic administration, such employees may qualify for 
exemption under Sec. 541.200 or under other sections of this part, 
provided the requirements for such exemptions are met.



                    Subpart D_Professional Employees



Sec. 541.300  General rule for professional employees.

    (a) The term ``employee employed in a bona fide professional 
capacity'' in section 13(a)(1) of the Act shall mean any employee:
    (1) Compensated on a salary or fee basis at a rate of not less than 
$455 per week (or $380 per week, if employed in American Samoa by 
employers other than the Federal Government), exclusive of board, 
lodging, or other facilities; and
    (2) Whose primary duty is the performance of work:
    (i) Requiring knowledge of an advanced type in a field of science or 
learning customarily acquired by a prolonged course of specialized 
intellectual instruction; or
    (ii) Requiring invention, imagination, originality or talent in a 
recognized field of artistic or creative endeavor.
    (b) The term ``salary basis'' is defined at Sec. 541.602; ``fee 
basis'' is defined at Sec. 541.605; ``board, lodging or other 
facilities'' is defined at Sec. 541.606; and ``primary duty'' is 
defined at Sec. 541.700.



Sec. 541.301  Learned professionals.

    (a) To qualify for the learned professional exemption, an employee's 
primary duty must be the performance of work requiring advanced 
knowledge in a field of science or learning customarily acquired by a 
prolonged course of specialized intellectual instruction. This primary 
duty test includes three elements:
    (1) The employee must perform work requiring advanced knowledge;
    (2) The advanced knowledge must be in a field of science or 
learning; and
    (3) The advanced knowledge must be customarily acquired by a 
prolonged course of specialized intellectual instruction.
    (b) The phrase ``work requiring advanced knowledge'' means work 
which

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is predominantly intellectual in character, and which includes work 
requiring the consistent exercise of discretion and judgment, as 
distinguished from performance of routine mental, manual, mechanical or 
physical work. An employee who performs work requiring advanced 
knowledge generally uses the advanced knowledge to analyze, interpret or 
make deductions from varying facts or circumstances. Advanced knowledge 
cannot be attained at the high school level.
    (c) The phrase ``field of science or learning'' includes the 
traditional professions of law, medicine, theology, accounting, 
actuarial computation, engineering, architecture, teaching, various 
types of physical, chemical and biological sciences, pharmacy and other 
similar occupations that have a recognized professional status as 
distinguished from the mechanical arts or skilled trades where in some 
instances the knowledge is of a fairly advanced type, but is not in a 
field of science or learning.
    (d) The phrase ``customarily acquired by a prolonged course of 
specialized intellectual instruction'' restricts the exemption to 
professions where specialized academic training is a standard 
prerequisite for entrance into the profession. The best prima facie 
evidence that an employee meets this requirement is possession of the 
appropriate academic degree. However, the word ``customarily'' means 
that the exemption is also available to employees in such professions 
who have substantially the same knowledge level and perform 
substantially the same work as the degreed employees, but who attained 
the advanced knowledge through a combination of work experience and 
intellectual instruction. Thus, for example, the learned professional 
exemption is 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. However, the learned professional exemption is not 
available for occupations that customarily may be performed with only 
the general knowledge acquired by an academic degree in any field, with 
knowledge acquired through an apprenticeship, or with training in the 
performance of routine mental, manual, mechanical or physical processes. 
The learned professional exemption also does not apply to occupations in 
which most employees have acquired their skill by experience rather than 
by advanced specialized intellectual instruction.
    (e)(1) Registered or certified medical technologists. Registered or 
certified medical technologists who have successfully completed three 
academic years of pre-professional 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 generally meet the duties requirements for 
the learned professional exemption.
    (2) Nurses. Registered nurses who are registered by the appropriate 
State examining board generally meet the duties requirements for the 
learned professional exemption. Licensed practical nurses and other 
similar health care employees, however, generally do not qualify as 
exempt learned professionals because possession of a specialized 
advanced academic degree is not a standard prerequisite for entry into 
such occupations.
    (3) Dental hygienists. Dental hygienists who have successfully 
completed four academic years of pre-professional and professional study 
in an accredited college or university approved by the Commission on 
Accreditation of Dental and Dental Auxiliary Educational Programs of the 
American Dental Association generally meet the duties requirements for 
the learned professional exemption.
    (4) Physician assistants. Physician assistants who have successfully 
completed four academic years of pre-professional and professional 
study, including graduation from a physician assistant program 
accredited by the Accreditation Review Commission on Education for the 
Physician Assistant, and who are certified by the National Commission on 
Certification of Physician Assistants generally meet the duties 
requirements for the learned professional exemption.
    (5) Accountants. Certified public accountants generally meet the 
duties requirements for the learned professional

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exemption. In addition, many other accountants who are not certified 
public accountants but perform similar job duties may qualify as exempt 
learned professionals. However, accounting clerks, bookkeepers and other 
employees who normally perform a great deal of routine work generally 
will not qualify as exempt professionals.
    (6) Chefs. Chefs, such as executive chefs and sous chefs, who have 
attained a four-year specialized academic degree in a culinary arts 
program, generally meet the duties requirements for the learned 
professional exemption. The learned professional exemption is not 
available to cooks who perform predominantly routine mental, manual, 
mechanical or physical work.
    (7) Paralegals. Paralegals and legal assistants generally do not 
qualify as exempt learned professionals because an advanced specialized 
academic degree is not a standard prerequisite for entry into the field. 
Although many paralegals possess general four-year advanced degrees, 
most specialized paralegal programs are two-year associate degree 
programs from a community college or equivalent institution. However, 
the learned professional exemption is available for paralegals who 
possess advanced specialized degrees in other professional fields and 
apply advanced knowledge in that field in the performance of their 
duties. For example, if a law firm hires an engineer as a paralegal to 
provide expert advice on product liability cases or to assist on patent 
matters, that engineer would qualify for exemption.
    (8) Athletic trainers. Athletic trainers who have successfully 
completed four academic years of pre-professional and professional study 
in a specialized curriculum accredited by the Commission on 
Accreditation of Allied Health Education Programs and who are certified 
by the Board of Certification of the National Athletic Trainers 
Association Board of Certification generally meet the duties 
requirements for the learned professional exemption.
    (9) Funeral directors or embalmers. Licensed funeral directors and 
embalmers who are licensed by and working in a state that requires 
successful completion of four academic years of pre-professional and 
professional study, including graduation from a college of mortuary 
science accredited by the American Board of Funeral Service Education, 
generally meet the duties requirements for the learned professional 
exemption.
    (f) The areas in which the professional exemption may be available 
are expanding. As knowledge is developed, academic training is broadened 
and specialized degrees are offered in new and diverse fields, thus 
creating new specialists in particular fields of science or learning. 
When an advanced specialized degree has become a standard requirement 
for a particular occupation, that occupation may have acquired the 
characteristics of a learned profession. Accrediting and certifying 
organizations similar to those listed in paragraphs (e)(1), (e)(3), 
(e)(4), (e)(8) and (e)(9) of this section also may be created in the 
future. Such organizations may develop similar specialized curriculums 
and certification programs which, if a standard requirement for a 
particular occupation, may indicate that the occupation has acquired the 
characteristics of a learned profession.



Sec. 541.302  Creative professionals.

    (a) To qualify for the creative professional exemption, an 
employee's primary duty must be the performance of work requiring 
invention, imagination, originality or talent in a recognized field of 
artistic or creative endeavor as opposed to routine mental, manual, 
mechanical or physical work. The exemption does not apply to work which 
can be produced by a person with general manual or intellectual ability 
and training.
    (b) To qualify for exemption as a creative professional, the work 
performed must be ``in a recognized field of artistic or creative 
endeavor.'' This includes such fields as music, writing, acting and the 
graphic arts.
    (c) The requirement of ``invention, imagination, originality or 
talent'' distinguishes the creative professions from work that primarily 
depends on intelligence, diligence and accuracy. The duties of employees 
vary widely, and exemption as a creative professional depends on the 
extent of the invention, imagination, originality or

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talent exercised by the employee. Determination of exempt creative 
professional status, therefore, must be made on a case-by-case basis. 
This requirement generally is met by actors, musicians, composers, 
conductors, and soloists; painters who at most are given the subject 
matter of their painting; cartoonists who are merely told the title or 
underlying concept of a cartoon and must rely on their own creative 
ability to express the concept; essayists, novelists, short-story 
writers and screen-play 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); and persons 
holding the more responsible writing positions in advertising agencies. 
This requirement generally is not met by a person who is employed as a 
copyist, as an ``animator'' of motion-picture cartoons, or as a 
retoucher of photographs, since such work is not properly described as 
creative in character.
    (d) Journalists may satisfy the duties requirements for the creative 
professional exemption if their primary duty is work requiring 
invention, imagination, originality or talent, as opposed to work which 
depends primarily on intelligence, diligence and accuracy. Employees of 
newspapers, magazines, television and other media are not exempt 
creative professionals if they only collect, organize and record 
information that is routine or already public, or if they do not 
contribute a unique interpretation or analysis to a news product. Thus, 
for example, newspaper reporters who merely rewrite press releases or 
who write standard recounts of public information by gathering facts on 
routine community events are not exempt creative professionals. 
Reporters also do not qualify as exempt creative professionals if their 
work product is subject to substantial control by the employer. However, 
journalists may qualify as exempt creative professionals if their 
primary duty is performing on the air in radio, television or other 
electronic media; conducting investigative interviews; analyzing or 
interpreting public events; writing editorials, opinion columns or other 
commentary; or acting as a narrator or commentator.



Sec. 541.303  Teachers.

    (a) The term ``employee employed in a bona fide professional 
capacity'' in section 13(a)(1) of the Act also means any employee with a 
primary duty of teaching, tutoring, instructing or lecturing in the 
activity of imparting knowledge and who is employed and engaged in this 
activity as a teacher in an educational establishment by which the 
employee is employed. The term ``educational establishment'' is defined 
in Sec. 541.204(b).
    (b) Exempt teachers include, but are not limited to: Regular 
academic teachers; teachers of kindergarten or nursery school pupils; 
teachers of gifted or disabled children; teachers of skilled and semi-
skilled 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 advisors in such areas as drama, speech, debate or 
journalism are engaged in teaching. Such activities are a recognized 
part of the schools' responsibility in contributing to the educational 
development of the student.
    (c) The possession of an elementary or secondary teacher's 
certificate provides a clear means of identifying the individuals 
contemplated as being within the scope of the exemption for teaching 
professionals. Teachers who possess a teaching certificate qualify for 
the exemption regardless of the terminology (e.g., permanent, 
conditional, standard, provisional, temporary, emergency, or unlimited) 
used by the State to refer to different kinds of certificates. However, 
private schools and public schools are not uniform in requiring a 
certificate for employment as an elementary or secondary school teacher, 
and a teacher's certificate is not generally necessary for employment in 
institutions of higher education or other educational establishments. 
Therefore, a teacher who is not

[[Page 188]]

certified may be considered for exemption, provided that such individual 
is employed as a teacher by the employing school or school system.
    (d) The requirements of Sec. 541.300 and Subpart G (salary 
requirements) of this part do not apply to the teaching professionals 
described in this section.



Sec. 541.304  Practice of law or medicine.

    (a) The term ``employee employed in a bona fide professional 
capacity'' in section 13(a)(1) of the Act also shall mean:
    (1) Any employee who is the holder of a valid license or certificate 
permitting the practice of law or medicine or any of their branches and 
is actually engaged in the practice thereof; and
    (2) Any 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 the profession.
    (b) In the case of medicine, the exemption applies to physicians and 
other practitioners licensed and practicing in the field of medical 
science and healing or any of the medical specialties practiced by 
physicians or practitioners. The term ``physicians'' includes medical 
doctors including general practitioners and specialists, osteopathic 
physicians (doctors of osteopathy), podiatrists, dentists (doctors of 
dental medicine), and optometrists (doctors of optometry or bachelors of 
science in optometry).
    (c) Employees engaged in internship or resident programs, whether or 
not licensed to practice prior to commencement of the program, qualify 
as exempt professionals if they enter such internship or resident 
programs after the earning of the appropriate degree required for the 
general practice of their profession.
    (d) The requirements of Sec. 541.300 and subpart G (salary 
requirements) of this part do not apply to the employees described in 
this section.



                      Subpart E_Computer Employees



Sec. 541.400  General rule for computer employees.

    (a) Computer systems analysts, computer programmers, software 
engineers or other similarly skilled workers in the computer field are 
eligible for exemption as professionals under section 13(a)(1) of the 
Act and under section 13(a)(17) of the Act. Because job titles vary 
widely and change quickly in the computer industry, job titles are not 
determinative of the applicability of this exemption.
    (b) The section 13(a)(1) exemption applies to any computer employee 
compensated on a salary or fee basis at a rate of not less than $455 per 
week (or $380 per week, if employed in American Samoa by employers other 
than the Federal Government), exclusive of board, lodging or other 
facilities, and the section 13(a)(17) exemption applies to any computer 
employee compensated on an hourly basis at a rate not less than $27.63 
an hour. In addition, under either section 13(a)(1) or section 13(a)(17) 
of the Act, the exemptions apply only to computer employees whose 
primary duty consists of:
    (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 term ``salary basis'' is defined at Sec. 541.602; ``fee 
basis'' is defined at Sec. 541.605; ``board, lodging or other 
facilities'' is defined at Sec. 541.606; and ``primary duty'' is 
defined at Sec. 541.700.



Sec. 541.401  Computer manufacture and repair.

    The exemption for employees in computer occupations does not include 
employees engaged in the manufacture or repair of computer hardware and 
related equipment. Employees whose work is highly dependent upon, or 
facilitated by, the use of computers and

[[Page 189]]

computer software programs (e.g., engineers, drafters and others skilled 
in computer-aided design software), but who are not primarily engaged in 
computer systems analysis and programming or other similarly skilled 
computer-related occupations identified in Sec. 541.400(b), are also 
not exempt computer professionals.



Sec. 541.402  Executive and administrative computer employees.

    Computer employees within the scope of this exemption, as well as 
those employees not within its scope, may also have executive and 
administrative duties which qualify the employees for exemption under 
subpart B or subpart C of this part. For example, systems analysts and 
computer programmers generally meet the duties requirements for the 
administrative exemption if their primary duty includes work such as 
planning, scheduling, and coordinating activities required to develop 
systems to solve complex business, scientific or engineering problems of 
the employer or the employer's customers. Similarly, a senior or lead 
computer programmer who manages the work of two or more other 
programmers in a customarily recognized department or subdivision of the 
employer, and whose recommendations as to the hiring, firing, 
advancement, promotion or other change of status of the other 
programmers are given particular weight, generally meets the duties 
requirements for the executive exemption.



                    Subpart F_Outside Sales Employees



Sec. 541.500  General rule for outside sales employees.

    (a) The term ``employee employed in the capacity of outside 
salesman'' in section 13(a)(1) of the Act shall mean any employee:
    (1) Whose primary duty is:
    (i) making sales within the meaning of section 3(k) of the Act, or
    (ii) 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
    (2) Who is customarily and regularly engaged away from the 
employer's place or places of business in performing such primary duty.
    (b) The term ``primary duty'' is defined at Sec. 541.700. In 
determining the primary duty of an outside sales employee, work 
performed incidental to and in conjunction with the employee's own 
outside sales or solicitations, including incidental deliveries and 
collections, shall be regarded as exempt outside sales work. Other work 
that furthers the employee's sales efforts also shall be regarded as 
exempt work including, for example, writing sales reports, updating or 
revising the employee's sales or display catalogue, planning itineraries 
and attending sales conferences.
    (c) The requirements of subpart G (salary requirements) of this part 
do not apply to the outside sales employees described in this section.



Sec. 541.501  Making sales or obtaining orders.

    (a) Section 541.500 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) Sales within the meaning of section 3(k) of the Act include the 
transfer of title to tangible property, and in certain cases, of 
tangible and valuable evidences of intangible property. 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) Exempt outside sales 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 for ``the use of facilities'' 
includes the selling of time on radio or television, 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 outside sales exemption to 
employees who sell or take orders for a service, which may be performed 
for the customer by someone other than the person taking the order.

[[Page 190]]



Sec. 541.502  Away from employer's place of business.

    An outside sales employee must be customarily and regularly engaged 
``away from the employer's place or places of business.'' The outside 
sales employee is an employee who makes sales at the customer's place of 
business or, if selling door-to-door, at the customer's home. Outside 
sales does not include sales made by mail, telephone or the Internet 
unless such contact is used merely as an adjunct to personal calls. 
Thus, any fixed site, whether home or office, used by a salesperson as a 
headquarters or for telephonic solicitation of sales is considered one 
of the employer's places of business, even though the employer is not in 
any formal sense the owner or tenant of the property. However, an 
outside sales employee does not lose the exemption by displaying samples 
in hotel sample rooms during trips from city to city; these sample rooms 
should not be considered as the employer's places of business. 
Similarly, an outside sales employee does not lose the exemption by 
displaying the employer's products at a trade show. If selling actually 
occurs, rather than just sales promotion, trade shows of short duration 
(i.e., one or two weeks) should not be considered as the employer's 
place of business.



Sec. 541.503  Promotion work.

    (a) Promotion work is one type of activity often performed by 
persons who make sales, which may or may not be exempt outside sales 
work, depending upon the circumstances under which it is performed. 
Promotional work that is actually performed incidental to and in 
conjunction with an employee's own outside sales or solicitations is 
exempt work. On the other hand, promotional work that is incidental to 
sales made, or to be made, by someone else is not exempt outside sales 
work. An employee who does not satisfy the requirements of this subpart 
may still qualify as an exempt employee under other subparts of this 
rule.
    (b) A manufacturer's representative, for example, 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 an employee can be considered an 
exempt outside sales employee if the employee's primary duty is making 
sales or contracts. Promotion activities directed toward consummation of 
the employee's own sales are exempt. Promotional activities designed to 
stimulate sales that will be made by someone else are not exempt outside 
sales work.
    (c) Another example is a company representative who visits chain 
stores, arranges the merchandise on shelves, replenishes stock by 
replacing old with new merchandise, sets up displays and consults with 
the store manager when inventory runs low, but does not obtain a 
commitment for additional purchases. 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. 
Because the employee in this instance does not consummate the sale nor 
direct efforts toward the consummation of a sale, the work is not exempt 
outside sales work.



Sec. 541.504  Drivers who sell.

    (a) Drivers who deliver products and also sell such products may 
qualify as exempt outside sales employees only if the employee has a 
primary duty of making sales. In determining the primary duty of drivers 
who sell, work performed incidental to and in conjunction with the 
employee's own outside sales or solicitations, including loading, 
driving or delivering products, shall be regarded as exempt outside 
sales work.
    (b) Several factors should be considered in determining if a driver 
has a primary duty of making sales, including, but not limited to: a 
comparison of the driver's duties with those of other employees engaged 
as truck drivers and as salespersons; possession of a selling or 
solicitor's license when such license is required by law or ordinances; 
presence or absence of customary or contractual arrangements concerning 
amounts of products to be delivered; description of the employee's 
occupation in collective bargaining agreements; the employer's 
specifications as to qualifications for hiring;

[[Page 191]]

sales training; attendance at sales conferences; method of payment; and 
proportion of earnings directly attributable to sales.
    (c) Drivers who may qualify as exempt outside sales employees 
include:
    (1) A driver who provides the only sales contact between the 
employer and the customers visited, who calls on customers and takes 
orders for products, who delivers products from stock in the employee's 
vehicle or procures and delivers the product to the customer on a later 
trip, and who receives compensation commensurate with the volume of 
products sold.
    (2) A driver who obtains or solicits orders for the employer's 
products from persons who have authority to commit the customer for 
purchases.
    (3) A driver who calls on new prospects for customers along the 
employee's route and attempts to convince them of the desirability of 
accepting regular delivery of goods.
    (4) A driver who calls on established customers along the route and 
persuades regular customers to accept delivery of increased amounts of 
goods or of new products, even though the initial sale or agreement for 
delivery was made by someone else.
    (d) Drivers who generally would not qualify as exempt outside sales 
employees include:
    (1) A route driver whose primary 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.
    (2) A driver who often calls on established customers day after day 
or week after week, delivering a quantity of the employer's products at 
each call when the sale was not significantly affected by solicitations 
of the customer by the delivering driver or the amount of the sale is 
determined by the volume of the customer's sales since the previous 
delivery.
    (3) A driver primarily engaged in making deliveries to 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, in coolers or in 
cabinets, rotating stock according to date, and cleaning and otherwise 
servicing display cases), unless such work is in furtherance of the 
driver's own sales efforts.



                      Subpart G_Salary Requirements



Sec. 541.600  Amount of salary required.

    (a) To qualify as an exempt executive, administrative or 
professional employee under section 13(a)(1) of the Act, an employee 
must be compensated on a salary basis at a rate of not less than $455 
per week (or $380 per week, if employed in American Samoa by employers 
other than the Federal Government), exclusive of board, lodging or other 
facilities. Administrative and professional employees may also be paid 
on a fee basis, as defined in Sec. 541.605.
    (b) The $455 a week may be translated into equivalent amounts for 
periods longer than one week. The requirement will be met if the 
employee is compensated biweekly on a salary basis of $910, semimonthly 
on a salary basis of $985.83, or monthly on a salary basis of $1,971.66. 
However, the shortest period of payment that will meet this compensation 
requirement is one week.
    (c) In the case of academic administrative employees, the 
compensation requirement also may be met by compensation on a salary 
basis at a rate at least equal to the entrance salary for teachers in 
the educational establishment by which the employee is employed, as 
provided in Sec. 541.204(a)(1).
    (d) In the case of computer employees, the compensation requirement 
also may be met by compensation on an hourly basis at a rate not less 
than $27.63 an hour, as provided in Sec. 541.400(b).
    (e) In the case of professional employees, the compensation 
requirements in this section shall not apply to employees engaged as 
teachers (see Sec. 541.303); employees who hold a valid license or 
certificate permitting the practice of law or medicine or any of their 
branches and are actually engaged in the practice thereof (see Sec. 
541.304); or to employees who hold the requisite academic degree for the 
general practice of medicine and are engaged in an internship or 
resident program pursuant to the practice of the

[[Page 192]]

profession (see Sec. 541.304). 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. 541.601  Highly compensated employees.

    (a) An employee with total annual compensation of at least $100,000 
is deemed exempt under section 13(a)(1) of the Act if the employee 
customarily and regularly performs any one or more of the exempt duties 
or responsibilities of an executive, administrative or professional 
employee identified in subparts B, C or D of this part.
    (b)(1) ``Total annual compensation'' must include at least $455 per 
week paid on a salary or fee basis. Total annual compensation may also 
include commissions, nondiscretionary bonuses and other nondiscretionary 
compensation earned during a 52-week period. Total annual compensation 
does not include board, lodging and other facilities as defined in Sec. 
541.606, and does not include payments for medical insurance, payments 
for life insurance, contributions to retirement plans and the cost of 
other fringe benefits.
    (2) If an employee's total annual compensation does not total at 
least the minimum amount established in paragraph (a) of this section by 
the last pay period of the 52-week period, the employer may, during the 
last pay period or within one month after the end of the 52-week period, 
make one final payment sufficient to achieve the required level. For 
example, an employee may earn $80,000 in base salary, and the employer 
may anticipate based upon past sales that the employee also will earn 
$20,000 in commissions. However, due to poor sales in the final quarter 
of the year, the employee actually only earns $10,000 in commissions. In 
this situation, the employer may within one month after the end of the 
year make a payment of at least $10,000 to the employee. Any such final 
payment made after the end of the 52-week period may count only toward 
the prior year's total annual compensation and not toward the total 
annual compensation in the year it was paid. If the employer fails to 
make such a payment, the employee does not qualify as a highly 
compensated employee, but may still qualify as exempt under subparts B, 
C or D of this part.
    (3) An employee who does not work a full year for the employer, 
either because the employee is newly hired after the beginning of the 
year or ends the employment before the end of the year, may qualify for 
exemption under this section if the employee receives a pro rata portion 
of the minimum amount established in paragraph (a) of this section, 
based upon the number of weeks that the employee will be or has been 
employed. An employer may make one final payment as under paragraph 
(b)(2) of this section within one month after the end of employment.
    (4) The employer may utilize any 52-week period as the year, such as 
a calendar year, a fiscal year, or an anniversary of hire year. If the 
employer does not identify some other year period in advance, the 
calendar year will apply.
    (c) A high level of compensation is a strong indicator of an 
employee's exempt status, thus eliminating the need for a detailed 
analysis of the employee's job duties. Thus, a highly compensated 
employee will qualify for exemption if the employee customarily and 
regularly performs any one or more of the exempt duties or 
responsibilities of an executive, administrative or professional 
employee identified in subparts B, C or D of this part. An employee may 
qualify as a highly compensated executive employee, for example, if the 
employee customarily and regularly directs the work of two or more other 
employees, even though the employee does not meet all of the other 
requirements for the executive exemption under Sec. 541.100.
    (d) This section applies only to employees whose primary duty 
includes performing office or non-manual work. Thus, for example, non-
management production-line workers and non-management employees in 
maintenance, construction and similar occupations such as carpenters, 
electricians, mechanics, plumbers, iron workers,

[[Page 193]]

craftsmen, operating engineers, longshoremen, construction workers, 
laborers and other employees who perform work involving repetitive 
operations with their hands, physical skill and energy are not exempt 
under this section no matter how highly paid they might be.



Sec. 541.602  Salary basis.

    (a) General rule. An employee will be considered to be paid on a 
``salary basis'' within the meaning of these regulations if the employee 
regularly receives each pay period on a weekly, or less frequent basis, 
a predetermined amount constituting all or part of the employee's 
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 in paragraph (b) of this section, an exempt 
employee must receive the full salary for any week in which the employee 
performs any work without regard to the number of days or hours worked. 
Exempt employees need not be paid for any workweek in which they perform 
no work. An employee is not paid on a salary basis if deductions from 
the employee's predetermined compensation are made for absences 
occasioned by the employer or by the operating requirements of the 
business. If the employee is ready, willing and able to work, deductions 
may not be made for time when work is not available.
    (b) Exceptions. The prohibition against deductions from pay in the 
salary basis requirement is subject to the following exceptions:
    (1) Deductions from pay may be made when an exempt employee is 
absent from work for one or more full days for personal reasons, other 
than sickness or disability. Thus, if an employee is absent for two full 
days to handle personal affairs, the employee's salaried status will not 
be affected if deductions are made from the salary for two full-day 
absences. However, if an exempt employee is absent for one and a half 
days for personal reasons, the employer can deduct only for the one 
full-day absence.
    (2) Deductions from pay may be made for absences of one or more full 
days occasioned by sickness or disability (including work-related 
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 such sickness or disability. The employer is not required 
to pay any portion of the employee's salary for full-day absences for 
which the employee receives compensation under the plan, policy or 
practice. Deductions for such full-day absences also may be made before 
the employee has qualified under the plan, policy or practice, and after 
the employee has exhausted the leave allowance thereunder. Thus, for 
example, if an employer maintains a short-term disability insurance plan 
providing salary replacement for 12 weeks starting on the fourth day of 
absence, the employer may make deductions from pay for the three days of 
absence before the employee qualifies for benefits under the plan; for 
the twelve weeks in which the employee receives salary replacement 
benefits under the plan; and for absences after the employee has 
exhausted the 12 weeks of salary replacement benefits. Similarly, an 
employer may make deductions from pay for absences of one or more full 
days if salary replacement benefits are provided under a State 
disability insurance law or under a State workers' compensation law.
    (3) While an employer cannot make deductions from pay for absences 
of an exempt employee occasioned by jury duty, attendance as a witness 
or temporary military leave, the employer can offset any amounts 
received by an employee as jury fees, witness fees or military pay for a 
particular week against the salary due for that particular week without 
loss of the exemption.
    (4) Deductions from pay of exempt employees may be made for 
penalties imposed in good faith for infractions of safety rules of major 
significance. Safety rules of major significance include those relating 
to the prevention of serious danger in the workplace or to other 
employees, such as rules prohibiting smoking in explosive plants, oil 
refineries and coal mines.
    (5) Deductions from pay of exempt employees may be made for unpaid 
disciplinary suspensions of one or more

[[Page 194]]

full days imposed in good faith for infractions of workplace conduct 
rules. Such suspensions must be imposed pursuant to a written policy 
applicable to all employees. Thus, for example, an employer may suspend 
an exempt employee without pay for three days for violating a generally 
applicable written policy prohibiting sexual harassment. Similarly, an 
employer may suspend an exempt employee without pay for twelve days for 
violating a generally applicable written policy prohibiting workplace 
violence.
    (6) An employer is not required to pay the full salary in the 
initial or terminal week of employment. Rather, an employer may pay a 
proportionate part of an employee's full salary for the time actually 
worked in the first and last week of employment. In such weeks, the 
payment of an hourly or daily equivalent of the employee's full salary 
for the time actually worked will meet the requirement. However, 
employees are not paid on a salary basis within the meaning of these 
regulations if they are employed occasionally for a few days, and the 
employer pays them a proportionate part of the weekly salary when so 
employed.
    (7) An employer is not required to pay the full salary for weeks in 
which an exempt employee takes unpaid leave under the Family and Medical 
Leave Act. Rather, when an exempt employee takes unpaid leave under the 
Family and Medical Leave Act, an employer may pay a proportionate part 
of the full salary for time actually worked. For example, if an employee 
who normally works 40 hours per week uses four hours of unpaid leave 
under the Family and Medical Leave Act, the employer could deduct 10 
percent of the employee's normal salary that week.
    (c) When calculating the amount of a deduction from pay allowed 
under paragraph (b) of this section, the employer may use the hourly or 
daily equivalent of the employee's full weekly salary or any other 
amount proportional to the time actually missed by the employee. A 
deduction from pay as a penalty for violations of major safety rules 
under paragraph (b)(4) of this section may be made in any amount.



Sec. 541.603  Effect of improper deductions from salary.

    (a) An employer who makes improper deductions from salary shall lose 
the exemption if the facts demonstrate that the employer did not intend 
to pay employees on a salary basis. An actual practice of making 
improper deductions demonstrates that the employer did not intend to pay 
employees on a salary basis. The factors to consider when determining 
whether an employer has an actual practice of making improper deductions 
include, but are not limited to: the number of improper deductions, 
particularly as compared to the number of employee infractions 
warranting discipline; the time period during which the employer made 
improper deductions; the number and geographic location of employees 
whose salary was improperly reduced; the number and geographic location 
of managers responsible for taking the improper deductions; and whether 
the employer has a clearly communicated policy permitting or prohibiting 
improper deductions.
    (b) If the facts demonstrate that the employer has an actual 
practice of making improper deductions, the exemption is lost during the 
time period in which the improper deductions were made for employees in 
the same job classification working for the same managers responsible 
for the actual improper deductions. Employees in different job 
classifications or who work for different managers do not lose their 
status as exempt employees. Thus, for example, if a manager at a company 
facility routinely docks the pay of engineers at that facility for 
partial-day personal absences, then all engineers at that facility whose 
pay could have been improperly docked by the manager would lose the 
exemption; engineers at other facilities or working for other managers, 
however, would remain exempt.
    (c) Improper deductions that are either isolated or inadvertent will 
not result in loss of the exemption for any employees subject to such 
improper deductions, if the employer reimburses the employees for such 
improper deductions.
    (d) If an employer has a clearly communicated policy that prohibits 
the

[[Page 195]]

improper pay deductions specified in Sec. 541.602(a) and includes a 
complaint mechanism, reimburses employees for any improper deductions 
and makes a good faith commitment to comply in the future, such employer 
will not lose the exemption for any employees unless the employer 
willfully violates the policy by continuing to make improper deductions 
after receiving employee complaints. If an employer fails to reimburse 
employees for any improper deductions or continues to make improper 
deductions after receiving employee complaints, the exemption is lost 
during the time period in which the improper deductions were made for 
employees in the same job classification working for the same managers 
responsible for the actual improper deductions. The best evidence of a 
clearly communicated policy is a written policy that was distributed to 
employees prior to the improper pay deductions by, for example, 
providing a copy of the policy to employees at the time of hire, 
publishing the policy in an employee handbook or publishing the policy 
on the employer's Intranet.
    (e) This section shall not be construed in an unduly technical 
manner so as to defeat the exemption.



Sec. 541.604  Minimum guarantee plus extras.

    (a) An employer may provide an exempt employee with additional 
compensation without losing the exemption or violating the salary basis 
requirement, if the employment arrangement also includes a guarantee of 
at least the minimum weekly-required amount paid on a salary basis. 
Thus, for example, an exempt employee guaranteed at least $455 each week 
paid on a salary basis may also receive additional compensation of a one 
percent commission on sales. An exempt employee also may receive a 
percentage of the sales or profits of the employer if the employment 
arrangement also includes a guarantee of at least $455 each week paid on 
a salary basis. Similarly, the exemption is not lost if an exempt 
employee who is guaranteed at least $455 each week paid on a salary 
basis also receives additional compensation based on hours worked for 
work beyond the normal workweek. Such additional compensation may be 
paid on any basis (e.g., flat sum, bonus payment, straight-time hourly 
amount, time and one-half or any other basis), and may include paid time 
off.
    (b) An exempt employee's earnings may be computed on an hourly, a 
daily or a shift basis, without losing the exemption or violating the 
salary basis requirement, if the employment arrangement also includes a 
guarantee of at least the minimum weekly required amount paid on a 
salary basis regardless of the number of hours, days or shifts worked, 
and a reasonable relationship exists between the guaranteed amount and 
the amount actually earned. The reasonable relationship test will be met 
if the weekly guarantee is roughly equivalent to the employee's usual 
earnings at the assigned hourly, daily or shift rate for the employee's 
normal scheduled workweek. Thus, for example, an exempt employee 
guaranteed compensation of at least $500 for any week in which the 
employee performs any work, and who normally works four or five shifts 
each week, may be paid $150 per shift without violating the salary basis 
requirement. The reasonable relationship requirement applies only if the 
employee's pay is computed on an hourly, daily or shift basis. It does 
not apply, for example, to an exempt store manager paid a guaranteed 
salary of $650 per week who also receives a commission of one-half 
percent of all sales in the store or five percent of the store's 
profits, which in some weeks may total as much as, or even more than, 
the guaranteed salary.



Sec. 541.605  Fee basis.

    (a) Administrative and professional employees may be paid on a fee 
basis, rather than on a salary basis. An employee will be considered to 
be paid on a ``fee basis'' within the meaning of these regulations if 
the employee is paid an agreed sum for a single job regardless of the 
time required for its completion. These payments resemble piecework 
payments with the important distinction that generally a ``fee'' is paid 
for the kind of job that is unique rather than for a series of jobs 
repeated an indefinite number of times and for which payment on an 
identical

[[Page 196]]

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.
    (b) To determine whether the fee payment meets the minimum amount of 
salary required for exemption under these regulations, the amount paid 
to the employee will be tested by determining the time worked on the job 
and whether the fee payment is at a rate that would amount to at least 
$455 per week if the employee worked 40 hours. Thus, an artist paid $250 
for a picture that took 20 hours to complete meets the minimum salary 
requirement for exemption since earnings at this rate would yield the 
artist $500 if 40 hours were worked.



Sec. 541.606  Board, lodging or other facilities.

    (a) To qualify for exemption under section 13(a)(1) of the Act, an 
employee must earn the minimum salary amount set forth in Sec. 541.600, 
``exclusive of board, lodging or other facilities.'' The phrase 
``exclusive of board, lodging or other facilities'' means ``free and 
clear'' or independent of any claimed credit for non-cash items of value 
that an employer may provide to an employee. Thus, the costs incurred by 
an employer to provide an employee with board, lodging or other 
facilities may not count towards the minimum salary amount required for 
exemption under this part 541. Such separate transactions are not 
prohibited between employers and their exempt employees, but the costs 
to employers associated with such transactions may not be considered 
when determining if an employee has received the full required minimum 
salary payment.
    (b) Regulations defining what constitutes ``board, lodging, or other 
facilities'' are contained in 29 CFR part 531. As described in 29 CFR 
531.32, the term ``other facilities'' refers to items similar to board 
and lodging, such as 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; merchandise furnished at company stores or 
commissaries, including articles of food, clothing, and household 
effects; housing furnished for dwelling purposes; and transportation 
furnished to employees for ordinary commuting between their homes and 
work.



           Subpart H_Definitions and Miscellaneous Provisions



Sec. 541.700  Primary duty.

    (a) To qualify for exemption under this part, an employee's 
``primary duty'' must be the performance of exempt work. The term 
``primary duty'' means the principal, main, major or most important duty 
that the employee performs. Determination of an employee's primary duty 
must be based on all the facts in a particular case, with the major 
emphasis on the character of the employee's job as a whole. Factors to 
consider when determining the primary duty of an employee include, but 
are not limited to, the relative importance of the exempt duties as 
compared with other types of duties; the amount of time spent performing 
exempt work; the employee's relative freedom from direct supervision; 
and the relationship between the employee's salary and the wages paid to 
other employees for the kind of nonexempt work performed by the 
employee.
    (b) The amount of time spent performing exempt work can be a useful 
guide in determining whether exempt work is the primary duty of an 
employee. Thus, employees who spend more than 50 percent of their time 
performing exempt work will generally satisfy the primary duty 
requirement. Time alone, however, is not the sole test, and nothing in 
this section requires that exempt employees spend more than 50 percent 
of their time performing exempt work. Employees who do not spend more 
than 50 percent of their time performing exempt duties may nonetheless 
meet the primary duty requirement if the other factors support such a 
conclusion.
    (c) Thus, for example, assistant managers in a retail establishment 
who perform exempt executive work such as supervising and directing the 
work of

[[Page 197]]

other employees, ordering merchandise, managing the budget and 
authorizing payment of bills may have management as their primary duty 
even if the assistant managers spend more than 50 percent of the time 
performing nonexempt work such as running the cash register. However, if 
such assistant managers are closely supervised and earn little more than 
the nonexempt employees, the assistant managers generally would not 
satisfy the primary duty requirement.



Sec. 541.701  Customarily and regularly.

    The phrase ``customarily and regularly'' means a frequency that must 
be greater than occasional but which, of course, may be less than 
constant. Tasks or work performed ``customarily and regularly'' includes 
work normally and recurrently performed every workweek; it does not 
include isolated or one-time tasks.



Sec. 541.702  Exempt and nonexempt work.

    The term ``exempt work'' means all work described in Sec. Sec. 
541.100, 541.101, 541.200, 541.300, 541.301, 541.302, 541.303, 541.304, 
541.400 and 541.500, and the activities directly and closely related to 
such work. All other work is considered ``nonexempt.''



Sec. 541.703  Directly and closely related.

    (a) Work that is ``directly and closely related'' to the performance 
of exempt work is also considered exempt work. The phrase ``directly and 
closely related'' means tasks that are related to exempt duties and that 
contribute to or facilitate performance of exempt work. Thus, ``directly 
and closely related'' work may include physical tasks and menial tasks 
that arise out of exempt duties, and the routine work without which the 
exempt employee's exempt work cannot be performed properly. Work 
``directly and closely related'' to the performance of exempt duties may 
also include recordkeeping; monitoring and adjusting machinery; taking 
notes; using the computer to create documents or presentations; opening 
the mail for the purpose of reading it and making decisions; and using a 
photocopier or fax machine. Work is not ``directly and closely related'' 
if the work is remotely related or completely unrelated to exempt 
duties.
    (b) The following examples further illustrate the type of work that 
is and is not normally considered as directly and closely related to 
exempt work:
    (1) Keeping time, production or sales records for subordinates is 
work directly and closely related to an exempt executive's function of 
managing a department and supervising employees.
    (2) The distribution of materials, merchandise or supplies to 
maintain control of the flow of and expenditures for such items is 
directly and closely related to the performance of exempt duties.
    (3) A supervisor who spot checks and examines the work of 
subordinates to determine whether they are performing their duties 
properly, and whether the product is satisfactory, is performing work 
which is directly and closely related to managerial and supervisory 
functions, so long as the checking is distinguishable from the work 
ordinarily performed by a nonexempt inspector.
    (4) A supervisor who sets up a machine may be engaged in exempt 
work, depending upon the nature of the industry and the operation. In 
some cases the setup work, or adjustment of the machine for a particular 
job, is typically performed by the same employees who operate the 
machine. Such setup work is part of the production operation and is not 
exempt. In other cases, the setting up of the work is a highly skilled 
operation which the ordinary production worker or machine tender 
typically does not perform. In large plants, non-supervisors may perform 
such work. However, particularly in small plants, such work may be a 
regular duty of the executive and is directly and closely related to the 
executive's responsibility for the work performance of subordinates and 
for the adequacy of the final product. Under such circumstances, it is 
exempt work.
    (5) A department manager in a retail or service establishment who 
walks about the sales floor observing the work of sales personnel under 
the employee's supervision to determine the effectiveness of their sales 
techniques,

[[Page 198]]

checks on the quality of customer service being given, or observes 
customer preferences is performing work which is directly and closely 
related to managerial and supervisory functions.
    (6) A business consultant may take extensive notes recording the 
flow of work and materials through the office or plant of the client; 
after returning to the office of the employer, the consultant may 
personally use the computer to type a report and create a proposed table 
of organization. Standing alone, or separated from the primary duty, 
such note-taking and typing would be routine in nature. However, because 
this work is necessary for analyzing the data and making 
recommendations, the work is directly and closely related to exempt 
work. While it is possible to assign note-taking and typing to nonexempt 
employees, and in fact it is frequently the practice to do so, 
delegating such routine tasks is not required as a condition of 
exemption.
    (7) A credit manager who makes and administers the credit policy of 
the employer, establishes credit limits for customers, authorizes the 
shipment of orders on credit, and makes decisions on whether to exceed 
credit limits would be performing work exempt under Sec. 541.200. Work 
that is directly and closely related to these exempt duties may include 
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.
    (8) A traffic manager in charge of planning a company's 
transportation, including 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, and making the necessary 
rearrangements resulting from delays, damages or irregularities in 
transit, is performing exempt work. If the employee also spends part of 
the day taking telephone orders for local deliveries, such order-taking 
is a routine function and is not directly and closely related to the 
exempt work.
    (9) An example of work directly and closely related to exempt 
professional duties is a chemist performing menial tasks such as 
cleaning a test tube in the middle of an original experiment, even 
though such menial tasks can be assigned to laboratory assistants.
    (10) A teacher performs work directly and closely related to exempt 
duties when, while taking students on a field trip, the teacher drives a 
school van or monitors the students' behavior in a restaurant.



Sec. 541.704  Use of manuals.

    The use of manuals, guidelines or other established procedures 
containing or relating to highly technical, scientific, legal, financial 
or other similarly complex matters that can be understood or interpreted 
only by those with advanced or specialized knowledge or skills does not 
preclude exemption under section 13(a)(1) of the Act or the regulations 
in this part. Such manuals and procedures provide guidance in addressing 
difficult or novel circumstances and thus use of such reference material 
would not affect an employee's exempt status. The section 13(a)(1) 
exemptions are not available, however, for employees who simply apply 
well-established techniques or procedures described in manuals or other 
sources within closely prescribed limits to determine the correct 
response to an inquiry or set of circumstances.



Sec. 541.705  Trainees.

    The executive, administrative, professional, outside sales and 
computer employee exemptions do not apply to employees training for 
employment in an executive, administrative, professional, outside sales 
or computer employee capacity who are not actually performing the duties 
of an executive, administrative, professional, outside sales or computer 
employee.



Sec. 541.706  Emergencies.

    (a) An exempt employee will not lose the exemption by performing 
work of a normally nonexempt nature because of the existence of an 
emergency. Thus, when emergencies arise that threaten

[[Page 199]]

the safety of employees, a cessation of operations or serious damage to 
the employer's property, any work performed in an effort to prevent such 
results is considered exempt work.
    (b) An ``emergency'' does not include occurrences that are not 
beyond control or for which the employer can reasonably provide in the 
normal course of business. Emergencies generally occur only rarely, and 
are events that the employer cannot reasonably anticipate.
    (c) The following examples illustrate the distinction between 
emergency work considered exempt work and routine work that is not 
exempt work:
    (1) A mine superintendent who pitches in after an explosion and digs 
out workers who are trapped in the mine is still a bona fide executive.
    (2) Assisting nonexempt employees with their work during periods of 
heavy workload or to handle rush orders is not exempt work.
    (3) Replacing a nonexempt employee during the first day or partial 
day of an illness may be considered exempt emergency work depending on 
factors such 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.
    (4) Regular repair and cleaning of equipment is not emergency work, 
even when necessary to prevent fire or explosion; however, repairing 
equipment may be emergency work if the breakdown of or damage to the 
equipment was caused by accident or carelessness that the employer could 
not reasonably anticipate.



Sec. 541.707  Occasional tasks.

    Occasional, infrequently recurring tasks that cannot practicably be 
performed by nonexempt employees, but are the means for an exempt 
employee to properly carry out exempt functions and responsibilities, 
are considered exempt work. The following factors should be considered 
in determining whether such work is exempt work: Whether the same work 
is performed by any of the exempt employee's subordinates; 
practicability of delegating the work to a nonexempt employee; whether 
the exempt employee performs the task frequently or occasionally; and 
existence of an industry practice for the exempt employee to perform the 
task.



Sec. 541.708  Combination exemptions.

    Employees who perform a combination of exempt duties as set forth in 
the regulations in this part for executive, administrative, 
professional, outside sales and computer employees may qualify for 
exemption. Thus, for example, an employee whose primary duty involves a 
combination of exempt administrative and exempt executive work may 
qualify for exemption. In other words, work that is exempt under one 
section of this part will not defeat the exemption under any other 
section.



Sec. 541.709  Motion picture producing industry.

    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 $695 a week (exclusive of board, 
lodging, or other facilities). Thus, an employee in this industry who is 
otherwise exempt under subparts B, C or D of this part, and who is 
employed at a base rate of at least $695 a week is exempt if paid a 
proportionate amount (based on a week of not more than 6 days) for any 
week in which the employee does not work a full workweek for any reason. 
Moreover, an otherwise exempt employee in this industry qualifies for 
exemption if the employee 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 the daily base rate would yield at least $695 if 6 
days were worked; or
    (b) The employee is in a job category having a weekly base rate of 
at least $695 and the daily base rate is at least one-sixth of such 
weekly base rate.



Sec. 541.710  Employees of public agencies.

    (a) An employee of a public agency who otherwise meets the salary 
basis requirements of Sec. 541.602 shall not be

[[Page 200]]

disqualified from exemption under Sec. Sec. 541.100, 541.200, 541.300 
or 541.400 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.



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.

    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, Sec. Sec. 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,

[[Page 201]]

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 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 
1215-0119)

[19 FR 4864, Aug. 3, 1954, as amended at 47 FR 145, Jan. 5, 1982; 71 FR 
16666, Apr. 3, 2006]



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.



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.''

                        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.

[[Page 202]]

548.501 Overtime hours based on nonstatutory standards.
548.502 Other payments.

    Authority: Sec. 7, 52 Stat. 1063, as amended; 29 U.S.C. 207, unless 
otherwise noted.



                      Subpart A_General Regulations

    Source: 20 FR 5679, Aug. 6, 1955, unless otherwise noted.



Sec. 548.1  Scope and effect of regulations.

    The regulations in this part set forth the requirements for 
authorization of established basic rates to be used in the computation 
of overtime pay in accordance with section 7(g)(3) of the Fair Labor 
Standards Act of 1938, as amended. Payment of overtime compensation in 
accordance with other subsections of section 7 of the Act is explained 
in part 778 of this title (Interpretative Bulletin on Overtime 
Compensation).



Sec. 548.2  General conditions.

    The requirements of section 7 of the Act with respect to the payment 
of overtime compensation to an employee for a workweek longer than the 
applicable number of hours established in section 7(a) of the Act, will 
be met under the provisions of section 7(g)(3) of the Act by payments 
which satisfy all the following standards:
    (a) Overtime compensation computed in accordance with this part and 
section 7(g)(3) of the Act is paid pursuant to an agreement or 
understanding arrived at between the employer and the employee or as a 
result of collective bargaining before performance of the work;
    (b) A rate is established by such agreement or understanding as the 
basic rate to be used in computing overtime compensation thereunder;
    (c) The established basic rate is a specified rate or a rate which 
can be derived from the application of a specified method of 
calculation;
    (d) The established basic rate is a bona fide rate and is not less 
than the minimum hourly rate required by applicable law;
    (e) The basic rate so established is authorized by Sec. 548.3 or is 
authorized by the Administrator under Sec. 548.4 as being substantially 
equivalent to the average hourly earnings of the employee, exclusive of 
overtime premiums, in the particular work over a representative period 
of time;
    (f) Overtime hours are compensated at a rate of not less than one 
and one-half times such established basic rate;
    (g) The hours for which the employee is paid not less than one and 
one-half times such established basic rate qualify as overtime hours 
under section 7(e) (5), (6), or (7) of the Act;
    (h) The number of hours for which the employee is paid not less than 
one and one-half times such established basic rate equals or exceeds the 
number of hours worked by him in any workweek in excess of the maximum 
workweek applicable to such employees under subsection 7(a) of the Act;
    (i) The employee's average hourly earnings for the workweek 
exclusive of payments described in paragraphs (1) through (7) of section 
7(e) of the Act are not less than the minimum hourly rate required by 
this Act or other applicable law;
    (j) Extra overtime compensation is properly computed and paid on 
other forms of additional pay which have not been considered in arriving 
at the basic rate but which are required to be included in computing the 
regular rate.

[20 FR 5679, Aug. 6, 1955, as amended at 26 FR 7731, Aug. 18, 1961]



Sec. 548.3  Authorized basic rates.

    A rate which meets all of the conditions of Sec. 548.2 and which in 
addition satisfies all the conditions set forth in one of the following 
paragraphs will be regarded as being substantially equivalent to the 
average hourly earnings of the employee, exclusive of overtime premiums, 
in the particular work over a representative period of time and may be 
used in computing overtime compensation for purposes of section 7(g)(3) 
of the Act, and Sec. 548.2:
    (a) A rate per hour which is obtained by dividing a monthly or semi-
monthly salary by the number of regular working days in each monthly or 
semi-monthly period and then by the number or hours in the normal or 
regular workday. Such a rate may be used to compute overtime 
compensation for all

[[Page 203]]

the overtime hours worked by the employee during the monthly or 
semimonthly period for which the salary is paid.
    (b) A rate per hour which is obtained by averaging the earnings, 
exclusive of payments described in paragraphs (1) through (7) of section 
7(e) of the Act, of the employee for all work performed during the 
workday or any other longer period not exceeding sixteen calendar days 
for which such average is regularly computed under the agreement or 
understanding. Such a rate may be used to compute overtime compensation 
for all the overtime hours worked by the employee during the particular 
period for which the earnings average is computed.
    (c) A rate per hour which is obtained by averaging the earnings, 
exclusive of payments described in paragraphs (1) through (7) of section 
7(e) of the Act, of the employee for each type of work performed during 
each workweek, or any other longer period not exceeding sixteen calendar 
days, for which such average is regularly computed under the agreement 
or understanding. Such a rate may be used to compute overtime 
compensation, during the particular period for which such average is 
computed, for all the overtime hours worked by the employee at the type 
of work for which the rate is obtained.
    (d) The rate or rates which may be used under the Act to compute 
overtime compensation of the employee but excluding the cost of meals 
where the employer customarily furnishes not more than a single meal per 
day.
    (e) The rate or rates (not less than the rates required by section 6 
(a) and (b) of the Act) which may be used under the Act to compute 
overtime compensation of the employee but excluding additional payments 
in cash or in kind which, if included in the computation of overtime 
under the Act, would not increase the total compensation of the employee 
by more than 50 cents a week on the average for all overtime weeks (in 
excess of the number of hours applicable under section 7(a) of the Act) 
in the period for which such additional payments are made.
    (f)(1) A rate per hour for each workweek equal to the average hourly 
remuneration of the employee for employment during the annual period or 
the quarterly period immediately preceding the calendar or fiscal 
quarter year in which such workweek ends, provided: (i) It is a fact, 
confirmed by proper records of the employer, that the terms, conditions, 
and circumstances of employment during such prior period, including 
weekly hours of work, work assignments and duties, and the basis of 
remuneration for employment, were not significantly different from the 
terms, conditions, and circumstances of employment which affect the 
employee's regular rates of pay during the current quarter year, or 
differ only because of some change in basic salary or similar 
nonfluctuating factor for which suitable adjustments have been made in 
the calculations to accurately reflect such change and (ii) such average 
hourly remuneration during the prior period is computed by the method or 
methods authorized in the following paragraphs.
    (2) The average hourly remuneration on which the rate authorized in 
paragraph (f)(1) of this section is based shall be computed: (i) By 
totaling all remuneration for employment during the workweeks ending in 
the prior period (including all earnings at hourly or piece rates, 
bonuses, commission or other incentive payments, and other forms of 
remuneration paid to or on behalf of the employee) except overtime 
premiums and other payments excluded from the regular rate pursuant to 
provisions of section 7(e) of the Act, and (ii) by dividing the amount 
thus obtained by the number of hours worked in such prior period for 
which such compensation was paid.
    (3) Where it is not practicable for an employer to compute the total 
remuneration of an employee for employment in the prior period in time 
to determine obligations under the Act for the current quarter year (as 
where computation of bonus, commission, or incentive payments cannot be 
made immediately at the end of the period), a one month grace period may 
be used. If this one month grace period is used, it will be deemed in 
compliance with paragraph (f)(1) of this section to use the basic rate 
authorized therein for the quarter commencing one month after the next 
preceding four-quarter

[[Page 204]]

or quarter-year period (whichever length period is adopted as the base 
period for the rate determination). Once the grace period method of 
computation is adopted it must be used for each successive quarter.

(52 Stat. 1060, as amended; 29 U.S.C. 201)

[20 FR 5679, Aug. 6, 1955, as amended at 28 FR 11266, Oct. 22, 1963; 31 
FR 6769, May 6, 1966]



Sec. 548.4  Application for authorization of a ``basic rate.''

    (a) Application may be made by any employer or group of employers, 
for authorization of a basic rate or rates, other than those approved 
under Sec. 548.3. Application must be made jointly with any collective 
bargaining representative of employees covered by the application. 
Application must be made to the Administrator of the Wage and Hour 
Division, U.S. Department of Labor, Washington, DC 20210.
    (b) Each application shall contain the following:
    (1) A statement of the agreement or understanding arrived at between 
the employer and employee, including the proposed effective date, the 
term of the agreement or understanding, and a statement of the 
applicable overtime provisions, and
    (2) A description of the basic rate of the method or formula to be 
used in computing the basic rate for the type of work or position to 
which it will be applicable, and
    (3) A statement of the kinds of jobs or employees covered by the 
agreement, and
    (4) The facts and reasons relied upon to show that the basic rate so 
established is substantially equivalent to the average hourly earnings 
of the employee, exclusive of overtime premiums, in the particular work 
over a representative period of time. For such showing, a basic rate 
shall be deemed ``substantially equivalent'' to the average hourly 
earnings of the employee if, during a representative period, the 
employee's total overtime earnings calculated at the basic rate in 
accordance with the applicable overtime provisions are substantially 
equivalent to the amount of such earnings when computed in accordance 
with section 7(a) of the Act on the basis of the employee's average 
hourly earnings for each workweek, and
    (5) Such additional information as the Administrator may require.
    (c) The Administrator shall require that notice of the application 
be given to affected employees in such manner as he deems appropriate. 
The Administrator shall notify the applicants in writing of his decision 
as to each application.
    (d) In authorizing a basic rate pursuant to this part, the 
Administrator shall include such conditions as are necessary to insure 
that the basic rate will be used only so long as it is substantially 
equivalent to the average hourly earnings of the employee, exclusive of 
overtime premiums, in the particular work over a representative period 
of time, and such other conditions as are necessary or appropriate to 
insure compliance with the provisions of the Act.
    (e) The Administrator may at any time, upon his own motion or upon 
written request of any interested party setting forth reasonable grounds 
therefor, and after a hearing or other opportunity to interested persons 
to present their views, amend or revoke any authorization granted under 
this part.



                        Subpart B_Interpretations

                              Introduction



Sec. 548.100  Introductory statement.

    (a) This subpart contains material explaining and illustrating the 
terms used in subpart A of this part which were issued under section 
7(g)(3) of the Fair Labor Standards Act. The purpose of section 7(g)(3) 
of the Act, and subpart A of this part, is to provide an exception from 
the requirements of computing overtime pay at the regular rate, \1\ and 
to allow, under specific conditions, the use of an established

[[Page 205]]

``basic'' rate \2\ instead. Basic rates are alternatives to the regular 
rate of pay under section 7(a), and their use is optional. The use of 
basic rates is principally intended to simplify bookkeeping and 
computation of overtime pay.
---------------------------------------------------------------------------

    \1\ The regular rate is the average hourly earnings of an employee 
for a workweek. See Sec. Sec. 778.107 to 778.122 of this chapter on 
overtime compensation. Sections 7(g)(1) and 7(g)(2) of the Act permit 
overtime compensation to be computed, under specified conditions, at 
time and one-half the bona fide hourly or piece rate applicable to the 
work performed during the overtime hours. See Sec. Sec. 778.415 to 
778.421 of this chapter.
    \2\ The term ``basic'' rate as used in this part means the rate 
authorized under section 7(g)(3) of the Fair Labor Standards Act. Such a 
rate may be used to compute overtime compensation under the Walsh-Healey 
Public Contracts Act. (See Rulings and Interpretations No. 3. section 
42(e)(1)). However, the term ``basic'' rate in this part should not be 
confused with the more general use of the term in the Public Contracts 
Act to describe all rates which may be used to compute overtime 
compensation or the use of the term in any other statute.
---------------------------------------------------------------------------

    (b) Section 7(g) of the Fair Labor Standards Act provides that an 
employer will comply with the overtime requirements of the Act if:

* * * pursuant to an agreement or understanding arrived at between the 
employer and the employee before performance of the work, the amount 
paid to the employee for the number of hours worked by him in such 
workweek in excess of the maximum workweek applicable to such employee 
under such subsection [7](a):

                                * * * * *

    (3) is computed at a rate not less than one and one-half times the 
rate established by such agreement or understanding as the basic rate to 
be used in computing overtime compensation thereunder: Provided, That 
the rate so established shall be authorized by regulation by the 
Secretary of Labor as being substantially equivalent to the average 
hourly earnings of the employee, exclusive of overtime premiums, in the 
particular work over a representative period of time; and if (i) the 
employee's average hourly earnings for the workweek exclusive of 
payments described in paragraphs (1) through (7) of subsection (e) are 
not less than the minimum hourly rate required by applicable law, and 
(ii) extra overtime compensation is properly computed and paid on other 
forms of additional pay required to be included in computing the regular 
rate.

[20 FR 5680, Aug. 6, 1955, as amended at 26 FR 7731, Aug. 18, 1961]

                      Requirements for a Basic Rate



Sec. 548.200  Requirements.

    The following conditions must be satisfied if a ``basic'' rate is to 
be considered proper under section 7(g)(3) and subpart A of this part.
    (a) Agreement or understanding. There must be an agreement or 
understanding establishing a basic rate or rates. This agreement must be 
arrived at before performance of the work to which it is intended to 
apply. It may be arrived at directly with the employee or through his 
representative. The ``basic'' rate method of computing overtime may be 
used for as many of the employees in an establishment as the employer 
chooses, provided he has reached an agreement or understanding with 
these employees prior to the performance of the work. \3\
---------------------------------------------------------------------------

    \3\ The records which an employer is required to maintain and 
preserve for an employee compensated for overtime hours on the basis of 
a basic rate are described in Sec. Sec. 516.5(b)(5) and 516.21 of this 
subchapter.
---------------------------------------------------------------------------

    (b) The rate. The established basic rate may be a specified rate or 
a rate which can be derived from the application of a specified method 
of calculation. For instance, under certain conditions the Regulations 
permit the use of the daily average hourly earnings of the employee as a 
basis for computing daily overtime. \4\ Thus, a method rather than a 
specific rate is authorized. Also, under certain conditions, the cost of 
a single meal a day furnished to employees may be excluded from the 
computation of overtime pay. \5\ It is the exclusion of the cost of the 
meals that is authorized and each employee's rate of pay, whatever it 
may be--an hourly rate, a piece rate or a salary--is his basic rate.
---------------------------------------------------------------------------

    \4\ See Sec. 548.302.
    \5\ See Sec. 548.304.
---------------------------------------------------------------------------

    (c) Minimum wage. The employee's average hourly earnings for the 
workweek (exclusive of overtime pay and other pay which may be excluded 
from the regular rate) \6\ and the established basic rate used to 
compute overtime

[[Page 206]]

pay may not be less than the legal minimum. \7\
---------------------------------------------------------------------------

    \6\ See Sec. Sec. 778.200 through 778.225 of this chapter for 
further discussion of what payments may be excluded.
    \7\ The legal minimum is the highest rate required by the Fair Labor 
Standards Act or other Federal, State or local law.

[20 FR 5680, Aug. 6, 1955, as amended at 21 FR 338, Jan. 18, 1956]

                         Authorized Basic Rates



Sec. 548.300  Introductory statement.

    Section 548.3 contains a description of a number of basic rates any 
one of which, when established by agreement or understanding, is 
authorized for use without prior specific approval of the Administrator. 
These basic rates have been found in use in industry and the 
Administrator has determined that they are substantially equivalent to 
the straight-time average hourly earnings of the employee over a 
representative period of time. The authorized basic rates are described 
below.

[20 FR 5681, Aug. 6, 1955]



Sec. 548.301  Salaried employees.

    (a) Section 548.3(a) authorizes as an established basic rate: ``A 
rate per hour which is obtained by dividing a monthly or semi-monthly 
salary by the number of regular working days in each monthly or semi-
monthly period and then by the number of hours in the normal or regular 
workday. Such a rate may be used to compute overtime compensation for 
all the overtime hours worked by the employee during the monthly or 
semi-monthly period for which the salary is paid.''
    (b) Section 548.3(a) may be applied to salaried employees paid on a 
monthly or semi-monthly basis. Under section 7(a) of the Act the method 
of computing the regular rate of pay for an employee who is paid on a 
monthly or semi-monthly salary basis is to reduce the salary to its 
weekly equivalent by multiplying the monthly salary by 12 (the number of 
months) or the semi-monthly salary by 24, and dividing by 52 (the number 
of weeks). The weekly equivalent is then divided by the number of hours 
in the week which the salary is intended to compensate. \8\ Section 
548.3(a) is designed to provide an alternative method of computing the 
rate for overtime purposes in the case of an employee who is compensated 
on a monthly or semi-monthly salary basis, where this method is found 
more desirable. This method is applicable only where the salary is paid 
for a specified number of days per week and a specified number of hours 
per day normally or regularly worked by the employee. It permits the 
employer to take into account the variations in the number of regular 
working days in each pay period. The basic rate authorized by Sec. 
548.3(a) is obtained by dividing the monthly or semi-monthly salary by 
the number of regular working days in the month or half-month, and then 
by the number of hours of the normal or regular work day.
---------------------------------------------------------------------------

    \8\ See Sec. 778.113 of this chapter.

    Example. An employee is compensated at a semi-monthly salary of $154 
for a workweek of 5 days of 8 hours each, Monday through Friday. If a 
particular half-month begins on Tuesday and ends on the second Tuesday 
following, there are 11 working days in that half-month. The employee's 
basic rate would then be computed by dividing the $154 salary by 11 
working days of 8 hours each, or 88 hours. The basic rate in this 
situation would therefore be $1.75 an hour. The basic rate would remain 
the same regardless of the fact that the employee did not actually work 
11 days of 8 hours each because of the occurrence of a holiday, or 
because the employee took a day off, or because he worked longer than 8 
hours on some days during the period, or because he worked fewer than 8 
hours on some days, or because he worked more then 11 days. In any of 
these circumstances the employee's basic rate would still be $1.75 an 
hour. If in the next semimonthly period there are 10 working days the 
rate would be computed by dividing the salary of $154 by 80 working 
hours, or 10 days of 8 hours each. The basic rate would therefore be 
$1.925 an hour. The rate would remain $1.925 an hour even though the 
employee did not in fact work ten 8-hour days during the period for the 
---------------------------------------------------------------------------
reasons indicated above, or for any other reason.

    (c) The overtime compensation for each workweek should be computed 
at not less than time and one-half the established basic rate applicable 
in the period during which the overtime is worked. Thus, in the example 
given above all overtime worked in the first half-month would be 
computed at not less than time and one-half the basic rate of $1.75 an 
hour; in the second half-month overtime would be paid for at not less 
than time and one-half the

[[Page 207]]

rate of $1.925 an hour. Where a workweek overlaps two semimonthly 
periods part of the overtime may be performed in one semimonthly period 
and part in another semimonthly period with a different basic rate. If 
it is desired to avoid computing overtime compensation in the same 
workweek at two different rates, the employment arrangement may provide 
that overtime compensation for each workweek should be computed at the 
established basic rate applicable in the half-monthly or monthly period 
during which the workweek ends.

(Sec. 1, 52 Stat. 1060, as amended, 29 U.S.C. 201, et seq.)

[20 FR 5681, Aug. 6, 1955, as amended at 32 FR 3293, Feb. 25, 1967]



Sec. 548.302  Average earnings for period other than a workweek.

    (a) Section 548.3(b) authorizes as an established basic rate: ``A 
rate per hour which is obtained by averaging the earnings, exclusive of 
payments described in paragraphs (1) through (7) of section 7(e) of the 
act, of the employee for all work performed during the workday or any 
other longer period not exceeding sixteen calendar days for which such 
average is regularly computed under the agreement or understanding. Such 
a rate may be used to compute overtime compensation for all the overtime 
hours worked by the employee during the particular period for which the 
earnings average is computed.''
    (b)(1) The ordinary method of computing overtime under the act is at 
the employee's regular rate of pay, obtained by averaging his hourly 
earnings for each workweek. Section 548.3(b) authorizes overtime to be 
computed on the basis of the employee's average hourly earnings for a 
period longer or shorter than a workweek. It permits the payment of 
overtime compensation on the basis of average hourly earnings for a day, 
a week, two weeks or any period up to 16 calendar days, if the period is 
established and agreed to with the employee prior to the performance of 
the work. \9\ The agreement or understanding may contemplate that the 
basic rate will be the average hourly earnings for a day or a specified 
number of days within the sixteen day limit, or it may provide that the 
basic rate will be the average hourly earnings for the period required 
to complete a specified job or jobs.
---------------------------------------------------------------------------

    \9\ Averaging over periods in excess of 16 calendar days may in 
appropriate cases be authorized by the Administrator under Sec. 548.4.

    Example 1. An employee is employed on a piece-work basis with 
overtime after 8 hours a day and on Saturday. Ordinarily his overtime 
compensation would be computed by averaging his earnings for the entire 
workweek to arrive at the regular rate of pay and then computing the 
overtime compensation due. Under this subsection of the regulations the 
employer and the employee may agree to compute overtime on the basis of 
the average hourly earnings for each day. Similarly, in a situation 
involving a bi-weekly or a semi-monthly pay period the employer may find 
it convenient to compute overtime on the basis of the average hourly 
earnings for the bi-weekly or semi-monthly period. \10\
---------------------------------------------------------------------------

    \10\ See Sec. 548.301 (c) for a discussion of the method of 
computing overtime for an employee paid on a semi-monthly basis.
---------------------------------------------------------------------------

    Example 2. An employee, who normally would come within the forty 
hour provision of section 7(a) of the Act, is paid a fixed amount of 
money for the completion of each job. Each job takes 2 or 3 days to 
complete. Under the employment agreement, the employee is entitled to 
time and one-half an authorized basic rate for all hours worked in 
excess of forty in the workweek. The authorized basic rate is the 
employee's average hourly earnings for each job. Suppose he completes 
two jobs in a particular workweek and all his overtime hours are on job 
No. 2. The employee's average hourly earnings on job No. 2 may be used 
to compute his overtime pay.

    (2) In this connection it should be noted that although the basic 
rate is obtained by averaging earnings over a period other than a 
workweek the number of overtime hours under the act must be determined 
on a workweek basis.
    (c) In computing the basic rate under Sec. 548.3(b), the employer 
may exclude from the computation the payments which he could exclude in 
computing the ``regular'' rate of pay. \11\
---------------------------------------------------------------------------

    \11\ See Sec. Sec. 778.200 through 778.225 of this chapter for an 
explanation of what payments may be excluded.

[20 FR 5681, Aug. 6, 1955, as amended at 26 FR 7731, Aug. 18, 1961]

[[Page 208]]



Sec. 548.303  Average earnings for each type of work.

    (a) Section 548.3(c) authorizes as an established basic rate: ``A 
rate per hour which is obtained by averaging the earnings, exclusive of 
payments described in paragraphs (1) through (7) of section 7(e) of the 
act, of the employee for each type of work performed during each 
workweek, or any other longer period not exceeding sixteen calendar 
days, for which such average is regularly computed under the agreement 
or understanding. Such a rate may be used to compute overtime 
compensation, during the particular period for which such average is 
computed, for all the overtime hours worked by the employee at the type 
of work for which the rate is obtained.''
    (b) Section 548.3(c) differs from Sec. 548.3(b) in this way: 
Section 548.3(b) provides for the computation of the basic rate on the 
average of all earnings during the specified period; Sec. 548.3(c) 
permits the basic rate to be computed on the basis of the earnings for 
each particular type of work. Thus, if the employee performs different 
types of work, each involving a different rate of pay such as different 
piece-rate, job rates, or a combination of these with hourly rates, a 
separate basic rate may be computed for each type of work and overtime 
computed on the basis of the rate or rates applicable to the type of 
work performed during the overtime hours.

    Example. An employee who is paid on a weekly basis with overtime 
after 40 hours works six 8-hour days in a workweek under an agreement or 
understanding reached pursuant to this subsection. He performs three 
different types of piecework, each at a different rate of pay. The basic 
rates to be used for computing overtime in this situation would be 
arrived at by dividing the earnings for each type of work by the number 
of hours during which that type of work was performed. There would thus 
be three different basic rates, one for each type of work. Since the 
overtime hours used in this illustration occur on the sixth day, the 
types of work performed on the sixth day would determine the basic rate 
or rates on which overtime would be computed that week. Thus, if the 
average hourly earnings for the three types of work are respectively 
$1.70 an hour in type A, $1.80 an hour in type B, and $2 an hour in type 
C, and on the sixth day the employee works on type B, his overtime 
premium for the sixth day would be one-half the basic rate of $1.80 an 
hour, multiplied by the 8 hours worked on that day.

(Sec. 1, 52 Stat. 1060, as amended, 29 U.S.C. 201, et seq.)

[20 FR 5681, Aug. 6, 1955, as amended at 32 FR 3293, Feb. 25, 1967]



Sec. 548.304  Excluding value of lunches furnished.

    (a) Section 548.3(d) authorizes as established basic rates:

    The rate or rates which may be used under the Act to compute 
overtime compensation of the employee but excluding the cost of meals 
where the employer customarily furnishes not more than a single meal per 
day.

    (b) It is the purpose of Sec. 548.3(d) to permit the employer upon 
agreement with his employees to omit from the computation of overtime 
the cost of a free daily lunch or other single daily meal furnished to 
the employees. The policy behind Sec. 548.3(d) is derived from the 
Administrator's experience that the amount of additional overtime 
compensation involved in such cases is trivial and does not justify the 
bookkeeping required in computing it. Section 548.3(d) is applicable 
only in cases where the employer customarily furnishes no more than a 
single meal a day. If more than one meal a day is customarily furnished 
by the employer all such meals must be taken into account in computing 
the regular rate of pay and the overtime compensation due. \12\ In a 
situation where the employer furnishes three meals a day to his 
employees he may not, under Sec. 548.3(d), omit one of the three meals 
in computing overtime compensation. However, if an employer furnishes a 
free lunch every day and, in addition, occasionally pays ``supper 
money'' \13\ when the employees work overtime, the cost of the lunches 
and the supper money may both be excluded from the overtime rates.
---------------------------------------------------------------------------

    \12\ See Sec. 531.37 of this chapter.
    \13\ See Sec. 778.217(b)(4) of this chapter.

[20 FR 5682, Aug. 6, 1955, as amended at 21 FR 338, Jan. 18, 1956]

[[Page 209]]



Sec. 548.305  Excluding certain additions to wages.

    (a) Section 548.3(e) authorizes as established basic rates: ``The 
rate or rates (not less than the rates required by section 6 (a) and (b) 
of the Act) which may be used under the Act to compute overtime 
compensation of the employee but excluding additional payments in cash 
or in kind which, if included in the computation of overtime under the 
Act, would not increase the total compensation of the employee by more 
than 50 cents a week on the average for all overtime weeks (in excess of 
the number of hours applicable under section 7(a) of the Act) in the 
period for which such additional payments are made.''
    (b) Section 548.3(e) permits the employer, upon agreement or 
understanding with the employee, to omit from the computation of 
overtime certain incidental payments which have a trivial effect on the 
overtime compensation due. Examples of payments which may be excluded 
are: modest housing, bonuses or prizes of various sorts, tuition paid by 
the employer for the employee's attendance at a school, and cash 
payments or merchandise awards for soliciting or obtaining new business. 
It may also include such things as payment by the employer of the 
employee's social security tax.
    (c) The exclusion of one or more additional payments under Sec. 
548.3(e) must not affect the overtime compensation of the employee by 
more than 50 cents a week on the average for the overtime weeks.

    Example. An employee, who normally would come within the 40-hour 
provision of section 7(a) of the Act, is paid a cost-of-living bonus of 
$260 each calendar quarter, or $20 per week. The employee works overtime 
in only 2 weeks in the 13-week period, and in each of these overtime 
weeks he works 50 hours. He is therefore entitled to $2 as overtime 
compensation on the bonus for each week in which overtime was worked 
(i.e., $20 bonus divided by 50 hours equals 40 cents an hour; 10 
overtime hours, times one-half, times 40 cents an hour, equals $2 per 
week). Since the overtime on the bonus is more than 50 cents on the 
average for the 2 overtime weeks, this cost-of-living bonus would not be 
excluded from the overtime computation under Sec. 548.3(e).

    (d) It is not always necessary to make elaborate computations to 
determine whether the effect of the exclusion of a bonus or other 
incidental payment on the employee's total compensation will exceed 50 
cents a week on the average. Frequently the addition to regular wages is 
so small or the number of overtime hours is so limited that under any 
conceivable circumstances exclusion of the additional payments from the 
rate used to compute the employee's overtime compensation would not 
affect the employee's total earnings by more than 50 cents a week. The 
determination that this is so may be made by inspection of the payroll 
records or knowledge of the normal working hours.

    Example. An employer has a policy of giving employees who have a 
perfect attendance record during a 4-week period a bonus of $10. The 
employee never works more than 50 hours a week. It is obvious that 
exclusion of this attendance bonus from the rate of pay used to compute 
overtime compensation could not affect the employee's total earnings by 
more than 50 cents a week. \14\
---------------------------------------------------------------------------

    \14\ For a 50-hour week, an employee's bonus would have to amount to 
$5 a week to affect his overtime compensation by 50 cents.

    (e) There are many situations in which the employer and employee 
cannot predict with any degree of certainty the amount of bonus to be 
paid at the end of the bonus period. They may not be able to anticipate 
with any degree of certainty the number of hours an employee might work 
each week during the bonus period. In such situations the employer and 
employee may agree prior to the performance of the work that a bonus 
will be disregarded in the computation of overtime pay if the employee's 
total earnings are not affected by more than 50 cents a week on the 
average for all overtime weeks during the bonus period. If it turns out 
at the end of the bonus period that the effect on the employee's total 
compensation would not exceed 50 cents a week on the average, then 
additional overtime compensation must be paid on the bonus. (See Sec. 
778.209 of this chapter, for an explanation of how to compute overtime 
on the bonus.)

[[Page 210]]

    (f) In order to determine whether the exclusion of a bonus or other 
incidental payment would affect the total compensation of the employee 
by not more than 50 cents a week on the average, a comparison is made 
between his total compensation computed under the employment agreement 
and his total compensation computed in accordance with the applicable 
overtime provisions of the Act.

    Example. An employee, who normally would come within the 40-hour 
provision of section 7(a) of the Act, is paid at piece rates and at one 
and one-half times the applicable piece rates for work performed during 
hours in excess of 40 in the workweek. The employee is also paid a 
bonus, which when apportioned over the bonus period, amounts to $2 a 
week. He never works more than 50 hours a week. The piece rates could be 
established as basic rates under the employment agreement and no 
additional overtime compensation paid on the bonus. The employee's total 
compensation computed in accordance with the applicable overtime 
provision of the Act, section 7(g)(1) \15\ would be affected by not more 
than 20 cents in any week by not paying overtime compensation on the 
bonus. \16\
---------------------------------------------------------------------------

    \15\ Section 7(g)(1) of the Act provides that overtime compensation 
may be paid at one and one-half times the applicable piece rate but 
extra overtime compensation must be properly computed and paid on 
additional pay required to be included in computing the regular rate.
    \16\ Bonus of $2 divided by fifty hours equals 4 cents an hour. Half 
of this hourly rate multiplied by ten overtime hours equals 20 cents.

    (g) Section 548.3(e) is not applicable to employees employed at 
subminimum wage rates under learner certificates, or special 
certificates for handicapped workers, or in the case of employees in 
Puerto Rico or the Virgin Islands employed at special minimum rates 
---------------------------------------------------------------------------
authorized by wage orders issued pursuant to the Act.

[31 FR 6769, May 6, 1966]



Sec. 548.306  Average earnings for year or quarter year preceding the 
current quarter.

    (a) Section 548.3(f)(1) authorizes as an established basic rate:

    A rate per hour for each workweek equal to the average hourly 
remuneration of the employee for employment during the annual period or 
the quarterly period immediately preceding the calendar or fiscal 
quarter year in which such workweek ends, provided (i) it is a fact, 
confirmed by proper records of the employer, that the terms, conditions, 
and circumstances of employment during such prior period, including 
weekly hours of work, work assignments and duties, and the basis of 
remuneration for employment, were not significantly different from the 
terms, conditions, and circumstances of employment which affect the 
employee's regular rates of pay during the current quarter year, and 
(ii) such average hourly remuneration during the prior period is 
computed by the method or methods authorized in the following 
subparagraphs.

    (b) There may be circumstances in which it would be impossible or 
highly impracticable for an employer at the end of a pay period to 
compute, allocate, and pay to an employee certain kinds of remuneration 
for employment during that pay period. This may be true in the case of 
such types of compensation as commissions, recurring bonuses, and other 
incentive payments which are calculated on work performance over a 
substantial period of time. Since the total amount of straight-time 
remuneration is unknown at the time of payment the full regular rate 
cannot be ascertained and overtime compensation could not be paid 
immediately except for the provisions of Sec. 548.3(f). In many such 
situations, the necessity for any subsequent computation and payment of 
the additional overtime compensation due on these types of remuneration 
can be avoided and all overtime premium pay due under the Act, including 
premium pay due on such a commission, bonus or incentive payment, can be 
paid at the end of the pay period rather than at some later date, if the 
parties to the employment agreement so desire. This is authorized by 
Sec. 548.3(f)(1), which provides an alternate method of paying overtime 
premium pay by permitting an employer, under certain conditions, to use 
an established basic rate for computing overtime premium pay at the end 
of each pay period rather than waiting until some later date when the 
exact amounts of the commission, bonus, or other incentive payment can 
be ascertained. Such established rate may also be used in other 
appropriate situations where the parties desire to avoid the necessity 
of recomputing the regular rate from week to week.

[[Page 211]]

    (c)(1) The rate authorized by Sec. Sec. 548.3(f)(1) is an average 
hourly rate based on earnings and hours worked during the workweeks 
ending in a representative period consisting of either the four quarter-
years or the last quarter-year immediately preceding the calendar or 
fiscal quarter-year in which the established rate is to be used. Such a 
rate may be used only if it is a fact, confirmed by proper records of 
the employer, that the terms, conditions, and circumstances of 
employment during this prior period were not significantly different 
from those affecting the employee's regular rates of pay during the 
current quarterly period. Significant differences in weekly hours of 
work, work assignments and duties, the basis of remuneration for 
employment, or other factors in the employment which could result in 
substantial differences in regular rates of pay as between the two 
periods will render the use of an established rate based on such a prior 
period inappropriate, and its use is not authorized under such 
circumstances.
    (2) However, an increase in the basic salary or other constant 
factor would not preclude the use of such a rate provided that accurate 
adjustments are made. For instance, assume that during the previous 
annual period an employee was compensated on the basis of a weekly 
salary of $70 plus a commission of 1 percent of sales. If his weekly 
salary is raised to $80 for the next annual period (assuming he still 
receives his commission of 1 percent of sales) the annual rate on which 
the established rate is to be computed must be adjusted by an increase 
of $520 ($10x52 weeks). For instance, assume the above employee earned a 
total of $4,244 and worked 2,318 hours during the previous annual period 
when his salary was $70 per week. Normally his established basic rate 
would be computed by dividing 2,318 hours into $4,244, thus arriving at 
a rate of $1.83. However, since the rate must reflect the increase in 
salary it must be computed by adding the anticipated increase to the pay 
received during the previous annual period ($4,244+ $520=$4,764). The 
established basic rate would then be $2.05.
    (d) Establishment of the rate explained in paragraphs (b) and (c) of 
this section is authorized under the circumstances there stated, 
provided it is computed in accordance with Sec. 548.3(f)(2), which 
prescribes the following method: First, all of the employees' 
remuneration for employment during the workweeks ending in the 
representative four-quarter or quarter-year period immediately preceding 
the current quarter, except overtime premiums and other payments 
excluded from the regular rate under section 7(e) of the Act, must be 
totaled. All straight-time earnings at hourly or piece rates or in the 
form of salary, commissions, bonus or other incentive payments, and 
board, lodging, or other facilities to the extent required under section 
3(m) of the Act and Part 531 of this chapter, together with all other 
forms of remuneration paid to or on behalf of the employee must be 
included in the above total. Second, this total sum must be divided by 
the total number of hours worked during all the workweeks ending in the 
prior period for which such remuneration was paid. The average hourly 
rate obtained through this division may be used as the established rate 
for computing overtime compensation in any workweek, in which the 
employee works in excess of the applicable maximum standard number of 
hours, ending in the calendar or fiscal quarter-year period following 
the four-quarter or quarterly period used for determination of this 
rate. This is authorized irrespective of any fluctuations of average 
straight-time hourly earnings above or below such rate from workweek to 
workweek within the quarter.
    (e) As a variant to the method of computation described in paragraph 
(d) of this section, it is provided in Sec. 548.3(f)(3), with respect 
to situations where it is not practicable for an employer to compute the 
total remuneration of an employee for employment in the prior period in 
time to determine obligations under the Act for the current quarter 
year, a one-month grace period may be used. This method is authorized, 
for example, in employment situations where the computation of bonuses, 
commissions, or other incentive payments cannot be made immediately at 
the end of the four-quarter or quarterly base period. If this one

[[Page 212]]

month grace period is used, it will be deemed in compliance with Sec. 
548.3(f)(1) to use the basic rate authorized therein for the quarter 
commencing one month after the next preceding four-quarter or quarter-
year period. To illustrate, suppose an employer and employee agree that 
the employee will be paid for overtime work at one and one-half times a 
basic rate computed in accordance with Sec. 548.3(f)(1), but on the pay 
day for the first workweek ending in the current quarter his records do 
not show all commissions earned by the employee in the preceding 
quarter. The employer and employee may therefore elect to use a one 
month grace period. This would mean that a basic rate for the quarter 
January 1-March 31, for example, which is derived from the prior four-
quarter (January 1-December 31) or quarterly (October 1-December 31) 
period, as the case may be, would be applied during a quarterly period 
commencing one month later (February 1-April 30) than the period 
(January 1-March 31) in which it would otherwise be applicable. The same 
adjustment would be made in succeeding quarters. Once the grace method 
of computation is adopted it must be used for each successive quarter.
    (f) The established basic rate must be designated and substantiated 
in the employer's records as required by part 516 of this chapter, and 
other requirements of such part with respect to records must be met. An 
agreement or understanding between the parties to use such rate must be 
reached prior to the quarter-year period in which the work to which it 
is applied is performed. The agreement or understanding may be limited 
to a fixed period or may be a continuing one, but use of the established 
rate under such an agreement or understanding is not authorized for any 
period in which terms, conditions, and circumstances of employment 
become significantly different from those obtaining during the period 
from which the rate was derived. This method of computation cannot be 
used if there is any change in the employee's position, method of pay, 
or amount of salary or if the employee was not employed during the full 
period used to determine the rate.
    (g) To function properly and to provide, over an extended period, 
overtime premium pay substantially equivalent to the pay the employee 
would receive if overtime were paid on the true regular rate, the plan 
must provide that overtime be computed on the established basic rate in 
every overtime week without regard to the fact that in some weeks the 
employee receives more premium pay than he would using the true regular 
rate and in some weeks less. Plans initiated pursuant to this section 
are based on averages and, if properly applied, will yield substantially 
the same overtime compensation in a representative period as the 
employee would have received if it were computed on the true regular 
rate.
    (h) The following examples assume the employee is due overtime 
premium pay for hours worked over 40 in the workweek.

    (1) Example. A sales employee whose applicable maximum hours 
standard is 40 hours enters into an agreement with his employer that he 
will be paid a salary plus a commission based on a certain percentage of 
sales. He agrees that this compensation will constitute his total 
straight-time earnings for all hours worked each week, provided such 
compensation equals or exceeds the applicable minimum wage.
    The employee further agrees that he is to receive overtime premium 
pay for each workweek on the normal pay day for that week; based each 
quarter on one-half his established basic rate derived by taking the 
hourly average of the total straight-time remuneration he received 
during the workweeks ending in the four-quarter period immediately 
preceding the current quarter. For example, his established basic rate 
for each workweek ending in the first quarter of 1964 (January through 
March) is determined by computing his average hourly rate for employment 
during all workweeks ending in the four quarter periods of 1963.
    Assume the employee worked the following number of hours and 
received the straight-time pay indicated:

------------------------------------------------------------------------
                                               Pay         Hours worked
   Line No.             Quarters        --------------------------------
 
------------------------------------------------------------------------
1.............  1st--1963..............   $1,074  ......     550  ......
2.............  2d--1963...............      980    $980     480     489
3.............  3d--1963...............    1,069   1,069     542     542
4.............  4th--1963..............    1,365   1,365     619     619
                                        ---------        --------
5.............  1, 2, 3, 4--1963.......    4,488  ......   2,200  ......
6.............  1st--1964..............  .......   1,168  ......     531
                                                 --------        -------

[[Page 213]]

 
7.............  2, 3, 4 (1963) 1 (1964)  .......   4,582  ......   2,181
------------------------------------------------------------------------


The employee's basic rate for the first quarter of 1964 (line 6) is 
determined by the hours worked and pay received in the four previous 
quarters (lines 1, 2, 3 and 4). Total pay received during that period 
($4,488.00, line 5) is divided by the total hours worked (2,200 hours, 
line 5) to derive the established basic rate ($2.04 per hour). This is 
the hourly rate on which overtime is computed in each workweek ending in 
the first quarter of 1964 in which the employee worked in excess of the 
applicable maximum hours standard. For instance, if in the first week of 
that quarter the employee worked 47 hours he would be due his guaranteed 
salary, his commission (at a later date) plus $7.14 as overtime premium 
pay (7 hoursx2.04x 1/2 ). It does not matter that the employee actually 
earned and ultimately received $90.71 in salary and commission as his 
total straight-time pay for that week and that his true hourly rate 
would be only $1.93 ($90.71/47 hours). The established basic rate is an 
average rate and is designed to be used, and must be used, in every 
overtime week in the quarter for which it was computed, without regard 
to the employee's true hourly rate in the particular week.
    The employee's basic rate for the second quarter of 1964 will be 
similarly computed at the end of the first quarter of that year by 
adding together the hours worked and pay received in the second, third, 
and fourth quarters of 1963 and the first quarter of 1964 (lines 2, 3, 4 
and 6) so that the totals now reflect the figures in line 7. The regular 
rate is again computed by dividing pay received ($4,582.00) by hours 
worked (2,181) and the new basic rate would be $2.10.
    (2)Example. Assume that an employee employed under a similar 
arrangement agrees to receive overtime premium pay for each workweek on 
the normal pay day, based each quarter on one-half his established basic 
rate determined by the quarterly method rather than by the annual method 
previously discussed. His established basic rate for the first quarter 
of 1964 would therefore be determined by computing his average hourly 
rate for the last quarter of 1963. To illustrate, if in the latter 
quarter the employee received $1,156.00 in straight time compensation 
and worked 561 hours, his basic rate for the first quarter of 1964 would 
therefore be $2.06 ($1,156.00/561 hours). During the overtime weeks in 
this quarter there would be due him, in addition to his straight time 
compensation, premium pay of $1.03 ($2.06x 1/2) for each hour he works 
in excess of the applicable maximum hours standard.
    As in the previous example the established basic rate must be used 
in every overtime week in the quarter for which it was computed without 
regard to the employee's true hourly rate in the particular quarter.

(Sec. 1, 52 Stat. 1060, 1062, as amended, 29 U.S.C. 201, et seq.)

[28 FR 11266, Oct. 22, 1963, as amended at 32 FR 3293, Feb. 26, 1967]

                     Rates Authorized on Application



Sec. 548.400  Procedures.

    (a) If an employer wants to use an established basic rate other than 
one of those authorized under Sec. 548.3, he must obtain specific prior 
approval from the Administrator. For example, if an employer wishes to 
compute overtime compensation for piece workers for each workweek in a 
4-week period at established basic rates which are the straight-time 
average hourly earnings for each employee for the immediately preceding 
4-week period, he should apply to the Administrator for authorization. 
The application for approval of such a basic rate should be addressed to 
the Administrator of the Wage and Hour Division, U.S. Department of 
Labor, Washington, DC 20210. No particular form of application is 
required but the minimum necessary information outlined in Sec. 548.4 
should be included. The application may be made by an employer or a 
group of employers. If any of the employees covered by the application 
is represented by a collective bargaining agent, a joint application of 
the employer and the bargaining agent should be filed. It is not 
necessary to file separate applications for each employee. One 
application will cover as many employees as will be paid at the proposed 
basic rate or rates.
    (b) Prior approval of the Administrator is also required if the 
employer desires to use a basic rate or basic rates which come within 
the scope of a combination of two or more of the paragraphs in Sec. 
548.3 unless the basic rate or rates sought to be adopted meet the 
requirements of a single paragraph in Sec. 548.3. For instance, an 
employee may receive free lunches, the cost of which, by agreement or 
understanding, is not to be included in the rate used to

[[Page 214]]

compute overtime compensation. \17\ In addition, the employee may 
receive an attendance bonus which, by agreement or understanding, is to 
be excluded from the rate used to compute overtime compensation. \18\ 
Since these exclusions involve two paragraphs of Sec. 548.3, prior 
approval of the Administrator would be necessary unless the exclusion of 
the cost of the free lunches together with the attendance bonus do not 
affect the employee's overtime compensation by more than 50 cents a week 
on the average, in which case the employer and the employee may treat 
the situation as one falling within a single paragraph, Sec. 548.3(e).
---------------------------------------------------------------------------

    \17\ See Sec. 548.304.
    \18\ See Sec. 548.305.

---------------------------------------------------------------------------
(Sec. 1, 52 Stat. 1060, as amended, 29 U.S.C. 201, et seq.)

[20 FR 5682, Aug. 6, 1955, as amended at 21 FR 338, Jan. 18, 1956; 32 FR 
3294, Feb. 25, 1967]



Sec. 548.401  Agreement or understanding.

    If the agreement or understanding establishing the basic rate is in 
writing, whether incorporated in a collective bargaining agreement or 
not, a copy of the agreement or understanding should be attached to the 
application. If it is not in writing, however, the application to the 
Administrator for approval of a basic rate should contain a written 
statement describing the substance of the agreement or understanding, 
including the proposed effective date and term of the agreement or 
understanding. The term of the agreement or understanding may be of 
definite duration, or may run indefinitely until modified or changed. If 
an agreement or understanding is modified, a new application for 
authorization should be made. \19\
---------------------------------------------------------------------------

    \19\ See Sec. 548.200 for a further explanation of the requirements 
as to the agreement or understanding establishing the basic rate.

[20 FR 5683, Aug. 6, 1955, as amended at 21 FR 338, Jan. 18, 1956]



Sec. 548.402  Applicable overtime provisions.

    The application should also contain a description of the terms of 
employment relating to overtime so that the Administrator can determine 
how the established basic rate will be used if it is approved. For 
instance, if the employees are to be paid time and one-half the basic 
rate for all hours worked in excess of 35 each workweek, this should be 
stated in the application. If the employees are to be paid double time 
for work on Sundays the application should so state.

[20 FR 5683, Aug. 6, 1955]



Sec. 548.403  Description of method of calculation.

    The established basic rate for which approval will be sought will 
normally be a formula or method of calculation of a rate rather than a 
specific dollars and cents rates. \20\ The application should contain a 
complete description of the formula or method of calculation of the 
established basic rate, including any necessary examples which will 
enable the Administrator to understand how the rate will be computed and 
applied.
---------------------------------------------------------------------------

    \20\ See Sec. 548.200.

[20 FR 5683, Aug. 6, 1955]



Sec. 548.404  Kinds of jobs or employees.

    The application should describe or otherwise identify the employees 
to whom the established basic rate will apply. The individual employees 
need not be identified by name but may be described in terms of job 
classification, department, location or other appropriate identifying 
characteristics.

[20 FR 5683, Aug. 6, 1955]



Sec. 548.405  Representative period.

    (a) The application must set forth the facts relied upon to show 
that the established basic rate is substantially equivalent to the 
average hourly earnings of the employee exclusive of overtime premiums 
over a representative period of time. \21\ The basic rate will be 
considered ``substantially equivalent'' to the average hourly earnings 
of the employee if, during a representative period, the employee's total 
overtime earnings calculated at the basic rate in accordance with the 
applicable overtime provisions are approximately

[[Page 215]]

equal to the employee's total overtime earnings computed on his average 
hourly earnings for each workweek in accordance with section 7(a) of the 
Act. \22\
---------------------------------------------------------------------------

    \21\ See Sec. Sec. 778.200 through 778.207 of this chapter for 
further discussion of overtime premiums which may be excluded from the 
regular rate of pay.
    \22\ See Sec. Sec. 778.208 through 778.225 of this chapter for 
further discussion of the exclusion of vacation pay, holiday pay, 
discretionary bonuses and other payments from the average hourly 
earnings which comprise the employee's regular rate of pay.
---------------------------------------------------------------------------

    (b) The length of time constituting a representative period will 
depend on the factors that cause the employee's average hourly earnings 
to vary appreciably from week to week. For instance, if the variation in 
earnings of an employee paid on an incentive basis is due to the 
difference in availability of work in the slow and busy seasons the 
period used for comparison of overtime earnings would have to include 
both a slow and a busy season in order to be representative. Likewise, 
if a piece-worker's average hourly earnings vary appreciably from week 
to week because of differences in materials or styles worked on, the 
period used for purposes of comparison would have to include work on the 
different materials and styles in order to be representative.

[20 FR 5683, Aug. 6, 1955]

                       Computation of Overtime Pay



Sec. 548.500  Methods of computation.

    The methods of computing overtime pay on the basic rates for piece 
workers, hourly rated employees, and salaried employees are the same as 
the methods of computing overtime pay at the regular rate.

    Example 1. Under an employment agreement the basic rate to be used 
in computing overtime compensation for a piece worker for hours of work 
in excess of 8 in each day is the employee's average hourly earnings for 
all work performed during that day. \23\ The employee is entitled to 
one-half the basic rate for each daily overtime hour in addition to the 
total piece work earnings for the day.
---------------------------------------------------------------------------

    \23\ See Sec. 548.302.
---------------------------------------------------------------------------

    Example 2. An employee, who normally would come within the forty 
hour provision of section 7(a) of the Act, has a basic rate which is his 
monthly salary divided by the number of regular hours of work in the 
month. \24\ If the salary is intended to cover straight-time 
compensation for a forty hour week he would be entitled to overtime for 
every hour after forty computed on the basis of one and one-half times 
the established basic rate, in addition to his monthly salary. If the 
salary is intended to cover a workweek shorter than forty hours, such as 
thirty-five hours, he would be entitled to additional straight time at 
the basic rate for the hours between thirty-five and forty and also to 
overtime at one and one-half time that rate for all hours worked in 
excess of forty in a week.
---------------------------------------------------------------------------

    \24\ See Sec. 548.301.

[20 FR 5683, Aug. 6, 1955, as amended at 26 FR 7732, Aug. 18, 1961]



Sec. 548.501  Overtime hours based on nonstatutory standards.

    Many employees are paid daily overtime pay or Saturday overtime pay 
or overtime pay on a basis other than the statutory standard of overtime 
pay required by section 7(a) of the Act. In these cases, the number of 
hours for which an employee is paid at least one and one-half times an 
established basic rate must equal or exceed the number of hours worked 
in excess of the applicable number of hours established in section 7(a) 
of the Act in the workweek. However, only overtime hours under the 
employment agreement which also qualify as overtime hours under section 
7(e) (5), (6), or (7) of the Act \25\ may be offset against the hours of 
work in excess of the applicable number of hours established in section 
7(a) of the Act.
---------------------------------------------------------------------------

    \25\ See Sec. Sec. 778.201 through 778.207 of this chapter.

[26 FR 7732, Aug. 18, 1961]



Sec. 548.502  Other payments.

    Extra overtime compensation must be separately computed and paid on 
payments such as bonuses or shift differentials which are not included 
in the computation of the established basic rate and which would have 
been included in the regular rate of pay. \26\
---------------------------------------------------------------------------

    \26\ Unless specifically excluded by agreement or understanding and 
prior authorization is obtained from the Administrator. See Sec. 
548.400(b).

    Example 1. An employee is paid on an hourly rate basis plus a 
production bonus, and also a shift differential of 10 cents for each

[[Page 216]]

hour worked on the second shift. The authorized basic rate under the 
agreement is the employee's daily average hourly earnings, and under the 
employment agreement he is paid one and one-half times the basic rate 
for all hours worked in excess of 8 each day. Suppose his production 
bonus is included in the computation of the basic rate, but the shift 
differential is not. In addition to overtime compensation computed at 
the basic rate the employee must be paid an extra 5 cents for each 
overtime hour worked on the second shift.
    Example 2. A piece worker, under his employment agreement, is paid 
overtime compensation for daily overtime and for hours of work on 
Saturday based on an authorized basic rate obtained by averaging his 
piece work earnings for the half-month. In addition, he is paid a 
monthly cost-of-living bonus which is not included in the computation of 
the basic rate. It will be necessary for the employer to compute and pay 
overtime compensation separately on the bonus. \27\
---------------------------------------------------------------------------

    \27\ See Sec. 778.209 of this chapter for an explanation of how to 
compute overtime on the bonus.

[20 FR 5683, Aug. 6, 1955]



PART 549_REQUIREMENTS OF A ``BONA FIDE PROFIT-SHARING PLAN OR TRUST''
--Table of Contents




Sec.
549.0 Scope and effect of regulations.
549.1 Essential requirements for qualifications.
549.2 Disqualifying provisions.
549.3 Distinction between plan and trust.

    Authority: Sec. 7, 52 Stat. 1063, as amended; 29 U.S.C. 207.

    Source: 18 FR 3292, June 10, 1953, unless otherwise noted.



Sec. 549.0  Scope and effect of regulations.

    (a) The regulations in this part set forth the requirements of a 
``bona fide profit-sharing plan or trust'' 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 profit-
sharing plan or trust 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) The inclusion or exclusion from the regular rate of 
contributions made by an employer pursuant to any plan or trust for 
providing old age, retirement, life, accident or health insurance or 
similar benefits for employees (regardless of whether the plan or trust 
is financed out of profits) is governed by section 7(e)(4) of the Act, 
the requirements of which are set forth in the Interpretative Bulletin 
on Overtime Compensation, part 778, of this chapter, Sec. Sec. 778.214 
and 778.215. However, where such a plan or trust is combined in a single 
program (whether in one or more documents) with a plan or trust for 
providing profit-sharing payments to employees, the profit-sharing 
payments may be excluded from the regular rate if they meet the 
requirements of the regulations in this part and the contributions made 
by the employer for providing the benefits described in section 7(e)(4) 
of the Act may be excluded from the regular rate if they meet the tests 
set forth in the Interpretative Bulletin, part 778, of this chapter, 
Sec. Sec. 778.214 and 778.215.



Sec. 549.1  Essential requirements for qualifications.

    (a) A bona fide profit-sharing plan or trust for purposes of section 
7(e)(3)(b) of the Act is required to meet all of the standards set forth 
in paragraphs (b) through (g) of this section and must not contain any 
of the disqualifying provisions set forth in Sec. 549.2.
    (b) The profit-sharing plan or trust constitutes a definite program 
or arrangement in writing, communicated or made available to the 
employees, which is established and maintained in good faith for the 
purpose of distributing to the employees a share of profits as 
additional remuneration over and above the wages or salaries paid to 
employees which wages or salaries are not dependent upon or influenced 
by the existence of such profit-sharing plan or trust or the amount of 
the payments made pursuant thereto.

[[Page 217]]

    (c) All contributions or allocations by the employer to the fund or 
trust to be distributed to the employees are:
    (1) Derived solely from profits of the employer's business 
enterprise, establishment or plant as a whole, or an established branch 
or division of the business or enterprise which is recognized as such 
for general business purposes and for which profits are separately and 
regularly calculated in accordance with accepted accounting practice; 
and
    (2) Made periodically, but not more frequently than is customary or 
consonant with accepted accounting practice to make periodic 
determinations of profit.
    (d) Eligibility to share in profits extends:
    (1) At least to all employees who are subject to the minimum wage 
and overtime provisions of the Act, or to all such employees in an 
established part of the employer's business as described in paragraph 
(c) of this section: Provided, however, That such eligibility may be 
determined by factors such as length of service or minimum schedule of 
hours or days of work which are specified in the plan or trust, and 
further, that eligibility need not extend to officers of the employer; 
or
    (2) To such classifications of employees as the employer may 
designate with the approval of the Administrator upon a finding, after 
notice to interested persons, including employee representatives, and an 
opportunity to present their views either orally or in writing, that it 
is in accord with the meaning and intent of the provisions of section 
7(e)(3)(b) of the Act and this part. The Administrator may give such 
notice by requiring the employer to post a notice approved by the 
Administrator for a specified period in a place or places where notices 
to employees are customarily posted or at such other place or places 
designated by the Administrator, or he may require notice to be given in 
such other manner as he deems appropriate.
    (e) The amounts paid to individual employees are determined in 
accordance with a definite formula or method of calculation specified in 
the plan or trust. The formula or method of calculation may be based on 
any one or more or more of such factors as straight-time earnings, total 
earnings, base rate of pay of the employee, straight-time hours or total 
hours worked by employees, or length of service, or distribution may be 
made on a per capita basis.
    (f) An employee's total share determined in accordance with 
paragraph (e) of this section may not be diminished because of any other 
remuneration received by him.
    (g) Provision is made either for payment to the individual employees 
of their respective shares of profits within a reasonable period after 
the determination of the amount of profits to be distributed, or for the 
irrevocable deposit by the employer of his employees' distributive 
shares of profits with a trustee for deferred distribution to such 
employees of their respective shares after a stated period of time or 
upon the occurrence of appropriate contingencies specified in the plan 
or trust: Provided, however, That the right of an employee to receive 
his share is not made dependent upon his continuing in the employ of the 
employer after the period for which the determination of profits has 
been made.

(Approved by the Office of Management and Budget under control number 
1215-0119)

[18 FR 3292, June 10, 1953, as amended at 47 FR 145, Jan. 5, 1982; 71 FR 
16666, Apr. 3, 2006]



Sec. 549.2  Disqualifying provisions.

    No plan or trust which contains any one of the following provisions 
shall be deemed to meet the requirements of a bona fide profit-sharing 
plan or trust under section 7(e)(3)(b) of the Act:
    (a) If the share of any individual employee is determined in 
substance on the basis of attendance, quality or quantity of work, rate 
of production, or efficiency;
    (b) If the amount to be paid periodically by the employer into the 
fund or trust to be distributed to the employees is a fixed sum;
    (c) If periodic payments of minimum amounts to the employees are 
guaranteed by the employer;
    (d) If any individual employee's share, by the terms of the plan or 
trust, is set at a predetermined fixed sum or is so limited as to 
provide in effect for the payment of a fixed sum, or

[[Page 218]]

is limited to or set at a predetermined specified rate per hour or other 
unit of work or worktime;
    (e) If the employer's contributions or allocations to the fund or 
trust to be distributed to the employees are based on factors other than 
profits such as hours of work, production, efficiency, sales or savings 
in cost.



Sec. 549.3  Distinction between plan and trust.

    As used in this part:
    (a) Profit-sharing plan means any such program or arrangement as 
qualifies hereunder which provides for the distribution by the employer 
to his employees of their respective shares of profits;
    (b) Profit-sharing trust means any such program or arrangement as 
qualifies under this part which provides for the irrevocable deposit by 
the employer of his employees' distributive shares of profits with a 
trustee for deferred distribution to such employees of their respective 
shares.



PART 550_DEFINING AND DELIMITING THE TERM ``TALENT FEES''--Table of 
Contents




Sec.
550.1 ``Talent fees'' as used in section 7(e)(3)(c) of the Fair Labor 
          Standards Act, as amended.
550.2 Definitions.

    Authority: Sec. 7, 52 Stat. 1063, as amended; 29 U.S.C. 207.



Sec. 550.1  ``Talent fees'' as used in section 7(e)(3)(c) of the Fair 
Labor Standards Act, as amended.

    The term talent fees in section 7(e)(3)(c) of the Act shall mean 
extra payments made to performers, including announcers on radio and 
television programs, where the payment is made:
    (a) To an employee having regular duties as a staff performer 
(including announcers), as an extra payment for services as a performer 
on a particular commercial program or a particular series of commercial 
programs (including commercial spot announcements) or for special 
services as a performer on a particular sustaining program or a 
particular series of sustaining programs;
    (b) In pursuance of an applicable employment agreement or 
understanding or an applicable collective bargaining agreement in a 
specific amount agreed upon in advance of the performance of the 
services or special services for which the extra payment is made: 
Provided, however, That where services described in paragraph (a) of 
this section are performed on a program falling outside of the regular 
workday or workweek as established and scheduled in good faith in 
accordance with the provisions of the applicable employment agreement, 
the Administrator will not regard the Act as requiring additional 
compensation as a result of the time worked on the program if the 
parties agree in advance of such program that a special payment made 
therefor shall include any increased statutory compensation attributable 
to the additional worktime thereon and if such special payment, when 
made, is actually sufficient in amount to include the statutory straight 
time and overtime compensation (computed without regard to talent fees) 
for the additional time worked in the workweek resulting from the 
performer's services on such program.

[15 FR 402, Jan. 25, 1950, as amended at 18 FR 5069, Aug. 25, 1953]



Sec. 550.2  Definitions.

    As used in the regulations in this part:
    (a) The term extra payment shall mean a payment, in a specific 
amount, made in addition to the straight-time and overtime compensation 
which would be due the performer under the agreement applicable to his 
employment and under the Act if the time spent in performing the 
services or special services referred to in paragraph (a) of Sec. 550.1 
had been devoted exclusively to duties as a staff performer; but shall 
not include any payment any part of which is credited or offset against 
any remuneration otherwise payable to the performer under any contract 
or statutory provision;
    (b) The term performer shall mean a person who performs a 
distinctive, personalized service as a part of an actual broadcast or 
telecast including an actor, singer, dancer, musician, comedian, or any 
person who entertains, affords amusement to, or occupies the interest of 
a radio or television audience

[[Page 219]]

by acting, singing, dancing, reading, narrating, performing feats of 
skill, or announcing, or describing or relating facts, events and other 
matters of interest, and who actively participates in such capacity in 
the actual presentation of a radio or television program. It shall not 
include such persons as script writers, stand-ins, or directors who are 
neither seen nor heard by the radio or television audience; nor shall it 
include persons who participate in the broadcast or telecast purely as 
technicians such as engineers, electricians and stage hands;
    (c) The term special services shall mean services beyond the scope 
of a performer's regular or ordinary duties as a staff performer under 
the agreement applicable to the employment.

[15 FR 402, Jan. 25, 1950]



PART 551_LOCAL DELIVERY DRIVERS AND HELPERS; WAGE PAYMENT PLANS--Table 
of Contents




Sec.
551.1 Statutory provision.
551.2 Findings authorized by this part.
551.3 Petition for a finding.
551.4 Requirements for a petition.
551.5 Information to be submitted.
551.6 Action on petition.
551.7 Finding.
551.8 Definitions.
551.9 Recordkeeping requirements.

    Authority: Sec. 9, 75 Stat. 74; 29 U.S.C. 213(b).

    Source: 30 FR 8585, July 7, 1965, unless otherwise noted.



Sec. 551.1  Statutory provision.

    The following provision for exemption from the overtime pay 
provision is contained in section 13(b) of the Fair Labor Standards Act 
of 1938, as amended (29 U.S.C. 213(b)):

    (b) The provisions of section 7 shall not apply with respect to:

                                * * * * *

    (11) any employee employed as a driver or driver's helper making 
local deliveries, who is compensated for such employment on the basis of 
trip rates, or other delivery payment plan, if the Secretary shall find 
that such plan has the general purpose and effect of reducing hours 
worked by such employees to, or below, the maximum workweek applicable 
to them under section 7(a).


Under this provision, an employee employed and compensated as described 
in the quoted paragraph (11) may be employed without payment of overtime 
compensation for a workweek longer than the maximum workweek applicable 
to him under section 7(a) of the Act, but only if it is established by a 
finding of the Secretary that the employee is compensated for his 
employment as a driver or driver's helper making local deliveries on the 
basis of trip rates or other delivery payment plan that has the general 
purpose and effect stated in section 13(b)(11). Such a finding is 
prescribed by the statute as one of the ``explicit prerequisites to 
exemption''. (See Arnold v. Kanowsky, 361 U.S. 388, 392.)



Sec. 551.2  Findings authorized by this part.

    (a) The Administrator, pursuant to the authority vested in him by 
the Secretary of Labor, will make and apply findings under section 
13(b)(11) of the Act as provided in this part. Such findings shall be 
made only upon petitions meeting the requirements of this part, and only 
as authorized in this section.
    (b) For the purpose of establishing whether a wage payment plan has 
the purpose and effect required by section 13(b)(11) for an exemption 
from the overtime provisions of the Act, the Administrator shall have 
authority, upon a proper showing and in accordance with the provisions 
of this part, to make a finding as to the general purpose and effect of 
any specific plan of compensation on the basis of trip rates or other 
delivery payment plan, with respect to the reduction of the length of 
the workweeks worked by the employees of any specific employer who are 
compensated in accordance with such plan for their employment by such 
employer as drivers or drivers' helpers making local deliveries.
    (c) Any finding made as to the purpose and effect of such a wage 
payment plan pursuant to a petition therefor will be based upon a 
consideration of all relevant facts shown or represented to exist with 
respect to such plan that are made available to the Administrator. A 
finding that such plan has the

[[Page 220]]

general effect of reducing the hours worked by drivers or drivers' 
helpers compensated thereunder to, or below, the maximum workweek 
applicable to them under section 7(a) of the Act is not authorized under 
this part unless the Administrator finds that during the most recently 
completed representative period of one year (based on the experience of 
the employer in question, or if such employer has not previously used 
such plan, on the experience of another employer using such plan under 
substantially the same conditions, all as defined in Sec. 551.8(g)(1)), 
the average weekly hours, taken in the aggregate, of all full-time 
employees covered by the plan are not in excess of the maximum workweek 
applicable to such employees under section 7(a), or unless the 
Administrator makes an interim finding with respect to such plan that, 
notwithstanding a lack of experience under it for a representative 
period of 1 year, its provisions and manner of operation, together with 
the other available information concerning the plan, indicate clearly 
that by the end of such first representative year the effect of the plan 
will have been to reduce the average weekly hours worked by the 
employees covered by the plan in such first year of operation to, or 
below, such maximum applicable workweek.



Sec. 551.3  Petition for a finding.

    Any employer desiring to establish an exemption from the overtime 
pay requirements of the Act with respect to employees whose employment 
and compensation may be considered to qualify therefor under section 
13(b)(11) may petition the Administrator, in writing, for a finding 
under such section and this part. If the wage payment plan with respect 
to which the finding is sought has been the subject of collective 
bargaining with representatives of employees covered by the plan, the 
employer shall provide timely notice of such petition, in writing, to 
the authorized representatives or representatives of such employees and 
shall submit a copy of such notice to the Administrator.



Sec. 551.4  Requirements for petition.

    A petition for a finding under section 13(b)(11) of the Act and this 
part shall include in such detail as the Administrator may deem 
necessary for evaluation under the standards provided by the statute and 
this part, all the information required by Sec. 551.5. Such information 
may be presented in any form convenient to the petitioner; no particular 
form is prescribed for the petition. The petition shall also include, by 
attachment, a copy of any collective bargaining agreement or other 
document governing the method of payment for the work of employees 
covered by the wage payment plan with respect to which a finding is 
requested. The petition, together with any such documents, shall be 
filed with the Administrator, Wage and Hour Division, United States 
Department of Labor, Washington, DC 20210.



Sec. 551.5  Information to be submitted.

    Every petition filed under Sec. Sec. 551.3 and 551.4 shall contain 
the following information:
    (a) A full statement of the facts relied upon by the petitioner to 
establish, under the applicable definitions in Sec. 551.8, that the 
wage payment plan submitted for consideration: (1) Applies to employees 
employed (i) as drivers or drivers' helpers, or both, (ii) in ``making 
local deliveries'' and (2) determines, ``on the basis of trip rates or 
other delivery payment plan'', the compensation which such employees 
receive for such employment; and
    (b) A complete description of the wage payment plan and full 
information concerning its application showing, among other things: (1) 
The method of compensation which it provides and the types of payments 
made to employees covered by the plan, together with such information as 
may be necessary to show how these payments are computed and how and to 
what extent they are actually used in determining the total compensation 
received by employees covered by the plan, (2) a full description of all 
duties performed by the employees compensated under the plan, including 
information as to the types of goods delivered, their points of origin 
and destination and the purposes for and geographical area within which 
they are transported by the employees, the relationship of the employer 
to the

[[Page 221]]

consignor and consignee, and the numbers, (minimum, maximum, and average 
or typical) of round trips made by such employees in transporting such 
goods during the workday and of deliveries made during each such trip, 
and (3) other relevant information concerning the employees compensated 
under the plan including the total number of such employees employed 
full-time as drivers or drivers' helpers making local deliveries under 
the provisions of the plan during the most recent representative annual 
period as defined in Sec. 551.8(g)(1), the weekly hours worked and the 
average workweek of such employees during such period and, if there are 
any significant variations in the number of such employees so employed 
in the particular workweeks within the period, a full statement of the 
facts concerning such variations, information as to any workweeks in 
which any employees compensated under the plan devote less than eighty 
percent of their worktime to duties as drivers or drivers' helpers 
making local deliveries; and
    (c) A statement of the facts and reasons based on the history and 
application of the plan which are relied upon to support a finding that 
the plan has the general purpose and effect of reducing the hours worked 
by drivers or drivers' helpers covered by its provisions to, or below, 
the statutory maximum workweek applicable to them under the Act.



Sec. 551.6  Action on petition.

    (a) Upon the filing of a petition as provided in this part, the 
Administrator will give consideration thereto, and make any further 
inquiry into the facts that he may deem necessary. The Administrator may 
require, before taking further action thereof, that notice of the 
petition be given to affected employees in such manner as he shall 
determine to be appropriate to afford them an opportunity to submit any 
facts or reasons supporting or opposing the finding prayed for in the 
petition. If the Administrator determines that the petition fails to 
satisfy any of the requirements of this part, he shall deny the request 
for a finding or, in his discretion, advise petitioners that further 
consideration will be given to the submission if the deficiencies are 
remedied within a specified time. No further consideration will be 
given, however, to a request for a finding if the Administrator 
determines that the factual situation as described in the petition is 
not one in which authority to make the finding is provided by section 
13(b)(11) and this part.
    (b) If the Administrator determines that a petition meets all 
requirements of this part and if he is satisfied from consideration of 
all relevant facts and information available to him that the wage 
payment plan submitted has, within the meaning of section 13(b)(11) of 
the Act and this part, the general purpose and effect with respect to 
drivers or drivers' helpers making local deliveries, who are employed 
pursuant to its provisions on the basis of trip rates or other delivery 
payment plan, of reducing the hours worked by such employees to, or 
below, the maximum workweek applicable to them under section 7(a) of the 
Act, the Administrator will make an appropriate finding to this effect, 
and notify the petitioner; otherwise the request for such a finding will 
be denied.



Sec. 551.7  Finding.

    (a) A finding by the Administrator under paragraph (b) of Sec. 
551.6 that a wage payment plan has the purpose and effect required for 
exemption of employees under section 13(b)(11) and this part shall be 
effective in accordance with its terms upon notification to petitioners 
as provided in Sec. 551.6(b). The finding shall include such terms and 
conditions and such limitations with respect to its application as the 
Administrator shall deem necessary to ensure that no exemption will be 
based thereon in the event of any significant change in any of the 
essential supporting facts.
    (b) A finding made pursuant to this part may be amended or revoked 
by the Administrator at any time upon his own motion or upon written 
request of any interested person setting forth reasonable grounds 
therefor. Before taking such action, the Administrator shall afford 
opportunity to interested persons to present their views and shall give 
consideration to any relevant information that they may present.

[[Page 222]]



Sec. 551.8  Definitions.

    As used in this part:
    (a) Secretary means the Secretary of Labor.
    (b) Administrator means the Administrator of the Wage and Hour 
Division, United States Department of Labor.
    (c) Finding means a finding made pursuant to section 13(b)(11) of 
the Fair Labor Standards Act as provided in this part.
    (d) Making local deliveries includes the activities customarily and 
regularly performed in the physical transfer, to customers of a business 
establishment situated within the rural or urban community or 
metropolitan area in which the establishment is located, of goods sold 
or otherwise disposed of to such local customers by such establishment. 
Included are activities performed by the driver or driver's helpers as 
an incident to or in conjunction with making such deliveries, such as 
picking up and returning the delivery vehicle at the beginning and end 
of the workday, cleaning the vehicle, checking it to see that it is in 
operating condition, loading and unloading or assisting in loading or 
unloading the goods, and picking up empty containers or other goods from 
customers for return to the establishment. Not included in the making of 
local deliveries are such transportation as the carriage of passengers; 
the transportation of any load of goods that would normally require a 
round trip longer than a single workday for delivery and return to the 
starting point; any movement of goods which does not accomplish a 
transfer of possession from one person to another; transportation of 
goods as a part of a process of production; and transportation of goods 
within a local community or metropolitan area as an integral part of a 
carriage of such goods from a point outside such community or area to a 
destination within it, rather than as a part of the activities 
customarily performed in making local deliveries, as defined in this 
section, in the same manner as deliveries of goods held locally for 
local disposition.
    (e) Employee employed as a driver or driver's helper making local 
deliveries includes any employee who is employed in any workweek:
    (1) To drive a delivery vehicle used in making local deliveries, or
    (2) To assist the driver of such a vehicle in making such 
deliveries, being required to ride on the vehicle to perform such work,

and whose work in making local deliveries, as defined in paragraph (d) 
of this section, accounts for at least 80 percent of his hours of work 
in such workweek. In making and applying any finding as provided in this 
part, no employee shall be considered to be employed as a driver or 
driver's helper making local deliveries in any workweek when more than 
20 percent of his hours of work results from the performance of duties 
other than those included in making such local deliveries.
    (f) A plan of compensation on the basis of trip rates or other 
delivery payment plan means any plan whereby employees employed as 
drivers or drivers' helpers making local deliveries are compensated for 
their employment on a basis such that the amount of payment which they 
receive is governed in substantial part by a system of wage payments 
based on units of work measurement such as numbers of trips taken, miles 
driven, stops made, or units of goods delivered (but not including any 
plan based solely on the number of hours worked) so that there is a 
substantial inducement to employees to minimize the number of hours 
worked.
    (g) For purposes of determining whether and to what extent a plan of 
compensation on the basis of trip rates or other delivery payment plan 
has the effect of reducing the weekly hours worked by employees employed 
by an employer as drivers or drivers' helpers making local deliveries 
pursuant to such plan:
    (1) The most recently completed representative period of one year 
(Sec. 551.2(c)) or most recent representative annual period (Sec. 
551.5(b)(3)) shall mean a one-year period within which such employees 
were so employed on a regular full-time basis by such employer (or, if 
such employer has not previously used such plan, by another employer 
using the plan under substantially the same conditions, which period 
shall include a calendar or fiscal quarter-year ending not more than 
four months prior to the

[[Page 223]]

date as of which the effect of such plan is to be considered, together 
with the three quarter-year periods immediately preceding such recently 
completed quarter-year; and
    (2) The average weekly hours or average workweek of the full-time 
employees so employed during such annual period shall mean the number of 
hours obtained by the following computation: (i) All the hours worked 
during such annual period by all the full-time employees regularly 
employed under the plan shall be totaled; (ii) the number of workweeks 
worked by each such employee during such annual period under such plan 
shall be computed, and the totals added together; and (iii) the average 
weekly hours, taken in the aggregate, of all such employees shall be 
computed by dividing the sum resulting from computation (i) by the sum 
resulting from computation (ii).



Sec. 551.9  Recordkeeping requirements.

    The records which must be kept and the computations which must be 
made with respect to employees for whom the overtime pay exemption under 
section 13(b)(11) is taken are specified in Sec. 516.15 of this 
chapter.

[35 FR 17841, Nov. 20, 1970]



PART 552_APPLICATION OF THE FAIR LABOR STANDARDS ACT TO DOMESTIC SERVICE
--Table of Contents




                      Subpart A_General Regulations

Sec.
552.1 Terms used in regulations.
552.2 Purpose and scope.
552.3 Domestic service employment.
552.4 Babysitting services.
552.5 Casual basis.
552.6 Companionship services for the aged or infirm.

                        Subpart B_Interpretations

552.99 Basis for coverage of domestic service employees.
552.100 Application of minimum wage and overtime provisions.
552.101 Domestic service employment.
552.102 Live-in domestic service employees.
552.103 Babysitting services in general.
552.104 Babysitting services performed on a casual basis.
552.105 Individuals performing babysitting services in their own homes.
552.106 Companionship services for the aged or infirm.
552.107 Yard maintenance workers.
552.108 Child labor provisions.
552.109 Third party employment.
552.110 Recordkeeping requirements.

    Authority: Secs. 13(a)(15) and 13(b)(21) of the Fair Labor Standards 
Act, as amended (29 U.S.C. 213(a)(15), (b)(21)), 88 Stat. 62; Sec. 29(b) 
of the Fair Labor Standards Amendments of 1974 (Pub. L. 93-259, 88 Stat. 
76), unless otherwise noted.

    Source: 40 FR 7405, Feb. 20, 1975, unless otherwise noted.



                      Subpart A_General Regulations



Sec. 552.1  Terms used in regulations.

    (a) Administrator means the Administrator of the Wage and Hour 
Division, U.S. Department of Labor, or the Administrator's authorized 
representative.
    (b) Act means the Fair Labor Standards Act of 1938, as amended.



Sec. 552.2  Purpose and scope.

    (a) This part provides necessary rules for the application of the 
Act to domestic service employment in accordance with the following 
amendments made by the Fair Labor Standards Amendments of 1974, 88 Stat. 
55, et seq.
    (b) Section 2(a) of the Act finds that the ``employment of persons 
in domestic service in households affects commerce.'' Section 6(f) 
extends the minimum wage protection under section 6(b) to employees 
employed as domestic service employees under either of the following 
circumstances:
    (1) If the employee's compensation for such services from his/her 
employer would constitute wages under section 209(a)(6) of title II of 
the Social Security Act, that is, if the cash remuneration during a 
calendar year is not less than $1,000 in 1995, or the amount designated 
for subsequent years pursuant to the adjustment provision in section 
3121(x) of the Internal Revenue Code of 1986; or
    (2) If the employee was employed in such domestic service work by 
one or more employers for more than 8 hours in the aggregate in any 
workweek.

Section 7(l) extends generally the protection of the overtime provisions 
of section 7(a) to such domestic service

[[Page 224]]

employees. Section 13(a)(15) provides both a minimum wage and overtime 
exemption for ``employees employed on a casual basis in domestic service 
employment to provide babysitting services'' and for domestic service 
employees employed'' to provide companionship services for individuals 
who (because of age or infirmity) are unable to care for themselves.'' 
Section 13(b)(21) provides an overtime exemption for domestic service 
employees who reside in the household in which they are employed.
    (c) The definitions required by section 13(a)(15) are contained in 
Sec. Sec. 552.3, 552.4, 552.5 and 552.6.

(Sec. 29(b), 88 Stat. 76; (29 U.S.C. 206(f)); Secretary's Order No. 16-
75, dated Nov. 25, 1975 (40 FR 55913), and Employment Standards Order 
No. 76-2, dated Feb. 23, 1976 (41 FR 9016))

[40 FR 7405, Feb. 20, 1975, as amended at 44 FR 37221, June 26, 1979; 60 
FR 46767, 46768, Sept. 8, 1995]



Sec. 552.3  Domestic service employment.

    As used in section 13(a)(15) of the Act, the term domestic service 
employment refers to services of a household nature performed by an 
employee in or about a private home (permanent or temporary) of the 
person by whom he or she is employed. The term includes employees such 
as cooks, waiters, butlers, valets, maids, housekeepers, governesses, 
nurses, janitors, laundresses, caretakers, handymen, gardeners, footmen, 
grooms, and chauffeurs of automobiles for family use. It also includes 
babysitters employed on other than a casual basis. This listing is 
illustrative and not exhaustive.



Sec. 552.4  Babysitting services.

    As used in section 13(a)(15) of the Act, the term babysitting 
services shall mean the custodial care and protection, during any part 
of the 24-hour day, of infants or children in or about the private home 
in which the infants or young children reside. The term ``babysitting 
services'' does not include services relating to the care and protection 
of infants or children which are performed by trained personnel, such as 
registered, vocational, or practical nurses. While such trained 
personnel do not qualify as babysitters, this fact does not remove them 
from the category of a covered domestic service employee when employed 
in or about a private household.



Sec. 552.5  Casual basis.

    As used in section 13(a)(15) of the Act, the term casual basis, when 
applied to babysitting services, shall mean employment which is 
irregular or intermittent, and which is not performed by an individual 
whose vocation is babysitting. Casual babysitting services may include 
the performance of some household work not related to caring for the 
children: Provided, however, That such work is incidental, i.e., does 
not exceed 20 percent of the total hours worked on the particular 
babysitting assignment.



Sec. 552.6  Companionship services for the aged or infirm.

    As used in section 13(a)(15) of the Act, the term companionship 
services shall mean those services which provide fellowship, care, and 
protection for a person who, because of advanced age or physical or 
mental infirmity, cannot care for his or her own needs. Such services 
may include household work related to the care of the aged or infirm 
person such as meal preparation, bed making, washing of clothes, and 
other similar services. They may also include the performance of general 
household work: Provided, however, That such work is incidental, i.e., 
does not exceed 20 percent of the total weekly hours worked. The term 
``companionship services'' does not include services relating to the 
care and protection of the aged or infirm which require and are 
performed by trained personnel, such as a registered or practical nurse. 
While such trained personnel do not qualify as companions, this fact 
does not remove them from the category of covered domestic service 
employees when employed in or about a private household.



                        Subpart B_Interpretations



Sec. 552.99  Basis for coverage of domestic service employees.

    Congress in section 2(a) of the Act specifically found that the 
employment

[[Page 225]]

of persons in domestic service in households affects commerce. In the 
legislative history it was pointed out that employees in domestic 
service employment handle goods such as soaps, mops, detergents, and 
vacuum cleaners that have moved in or were produced for interstate 
commerce and also that they free members of the household to themselves 
to engage in activities in interstate commerce (S. Rep. 93-690, pp. 21-
22). The Senate Committee on Labor and Public Welfare ``took note of the 
expanded use of the interstate commerce clause by the Supreme Court in 
numerous recent cases (particularly Katzenbach v. McClung, 379 U.S. 294 
(1964)),'' and concluded ``that coverage of domestic employees is a 
vital step in the direction of ensuring that all workers affecting 
interstate commerce are protected by the Fair Labor Standards Act'' (S. 
Rep. 93-690, pp. 21-22).



Sec. 552.100  Application of minimum wage and overtime provisions.

    (a)(1) Domestic service employees must receive for employment in any 
household a minimum wage of not less than that required by section 6(a) 
of the Fair Labor Standards Act.
    (2) In addition, domestic service employees who work more than 40 
hours in any one workweek for the same employer must be paid overtime 
compensation at a rate not less than one and one-half times the 
employee's regular rate of pay for such excess hours, unless the 
employee is one who resides in the employer's household. In the case of 
employees who reside in the household where they are employed, section 
13(b)(21) of the Act provides an overtime, but not a minimum wage, 
exemption. See Sec. 552.102.
    (b) In meeting the wage responsibilities imposed by the Act, 
employers may take appropriate credit for the reasonable cost or fair 
value, as determined by the Administrator, of food, lodging and other 
facilities customarily furnished to the employee by the employer such as 
drugs, cosmetics, drycleaning, etc. See S. Rep. 93-690, p. 19, and 
section 3(m) of the Act. Credit may be taken for the reasonable cost or 
fair value of these facilities only when the employee's acceptance of 
them is voluntary and uncoerced. See regulations, part 531. Where 
uniforms are required by the employer, the cost of the uniforms and 
their care may not be included in such credit.
    (c) For enforcement purposes, the Administrator will accept a credit 
taken by the employer of up to 37.5 percent of the statutory minimum 
hourly wage for a breakfast (if furnished), up to 50 percent of the 
statutory minimum hourly wage for a lunch (if furnished), and up to 62.5 
percent of the statutory minimum hourly wage for a dinner (if 
furnished), which meal credits when combined do not in total exceed 150 
percent of the statutory minimum hourly wage for any day. Nothing herein 
shall prevent employers from crediting themselves with the actual cost 
or fair value of furnishing meals, whichever is less, as determined in 
accordance with part 531 of this chapter, if such cost or fair value is 
different from the meal credits specified above: Provided, however, that 
employers keep, maintain and preserve (for a period of 3 years) the 
records on which they rely to justify such different cost figures.
    (d) In the case of lodging furnished to live-in domestic service 
employees, the Administrator will accept a credit taken by the employer 
of up to seven and one-half times the statutory minimum hourly wage for 
each week lodging is furnished. Nothing herein shall prevent employers 
from crediting themselves with the actual cost or fair value of 
furnishing lodging, whichever is less, as determined in accordance with 
part 531 of this chapter, if such cost or fair value is different from 
the amount specified above, provided, however, that employers keep, 
maintain, and preserve (for a period of 3 years) the records on which 
they rely to justify such different cost figures. In determining 
reasonable cost or fair value, the regulations and rulings in 29 CFR 
part 531 are applicable.

(Sec. 29(b), 88 Stat. 76; (29 U.S.C. 206(f)); Secretary's Order No. 16-
75, dated Nov. 25, 1975 (40 FR 55913), and Employment Standards Order 
No. 76-2, dated Feb. 23, 1976 (41 FR 9016))

[40 FR 7405, Feb. 20, 1975, as amended at 44 FR 6716, Feb. 2, 1979; 60 
FR 46768, Sept. 8, 1995]

[[Page 226]]



Sec. 552.101  Domestic service employment.

    (a) The definition of domestic service employment contained in Sec. 
552.3 is derived from the regulations issued under the Social Security 
Act (20 CFR 404.1057) and from ``the generally accepted meaning'' of the 
term. Accordingly, the term includes persons who are frequently referred 
to as ``private household workers.'' See S. Rep. 93-690, p. 20. The 
domestic service must be performed in or about the private home of the 
employer whether that home is a fixed place of abode or a temporary 
dwelling as in the case of an individual or family traveling on 
vacation. A separate and distinct dwelling maintained by an individual 
or a family in an apartment house, condominium or hotel may constitute a 
private home.
    (b) Employees employed in dwelling places which are primarily 
rooming or boarding houses are not considered domestic service 
employees. The places where they work are not private homes but 
commercial or business establishments. Likewise, employees employed in 
connection with a business or professional service which is conducted in 
a home (such as a real estate, doctor's, dentist's or lawyer's office) 
are not domestic service employees.
    (c) In determining the total hours worked, the employer must include 
all time the employee is required to be on the premises or on duty and 
all time the employee is suffered or permitted to work. Special rules 
for live-in domestic service employees are set forth in Sec. 552.102.

[40 FR 7405, Feb. 20, 1975, as amended at 60 FR 46768, Sept. 8, 1995]



Sec. 552.102  Live-in domestic service employees.

    (a) Domestic service employees who reside in the household where 
they are employed are entitled to the same minimum wage as domestic 
service employees who work by the day. However, section 13(b)(21) 
provides an exemption from the Act's overtime requirements for domestic 
service employees who reside in the household where employed. But this 
exemption does not excuse the employer from paying the live-in worker at 
the applicable minimum wage rate for all hours worked. In determining 
the number of hours worked by a live-in worker, the employee and the 
employer may exclude, by agreement between themselves, the amount of 
sleeping time, meal time and other periods of complete freedom from all 
duties when the employee may either leave the premises or stay on the 
premises for purely personal pursuits. For periods of free time (other 
than those relating to meals and sleeping) to be excluded from hours 
worked, the periods must be of sufficient duration to enable the 
employee to make effective use of the time. If the sleeping time, meal 
periods or other periods of free time are interrupted by a call to duty, 
the interruption must be counted as hours worked. See regulations part 
785, Sec. 785.23.
    (b) Where there is a reasonable agreement, as indicated in (a) 
above, it may be used to establish the employee's hours of work in lieu 
of maintaining precise records of the hours actually worked. The 
employer shall keep a copy of the agreement and indicate that the 
employee's work time generally coincides with the agreement. If it is 
found by the parties that there is a significant deviation from the 
initial agreement, a separate record should be kept for that period or a 
new agreement should be reached that reflects the actual facts.



Sec. 552.103  Babysitting services in general.

    The term ``babysitting services'' is defined in Sec. 552.4. 
Babysitting is a form of domestic service, and babysitters other than 
those working on a casual basis are entitled to the same benefits under 
the Act as other domestic service employees.



Sec. 552.104  Babysitting services performed on a casual basis.

    (a) Employees performing babysitting services on a casual basis, as 
defined in Sec. 552.5 are excluded from the minimum wage and overtime 
provisions of the Act. The rationale for this exclusion is that such 
persons are usually not dependent upon the income from rendering such 
services for their livelihood. Such services are often provided by (1) 
Teenagers during non-school hours or for a short period after

[[Page 227]]

completing high school but prior to entering other employment as a 
vocation, or (2) older persons whose main source of livelihood is from 
other means.
    (b) Employment in babysitting services would usually be on a 
``casual basis,'' whether performed for one or more employees, if such 
employment by all such employers does not exceed 20 hours per week in 
the aggregate. Employment in excess of these hours may still be on a 
``casual basis'' if the excessive hours of employment are without 
regularity or are for irregular or intermittent periods. Employment in 
babysitting services shall also be deemed to be on a ``casual basis'' 
(regardless of the number of weekly hours worked by the babysitter) in 
the case of individuals whose vocations are not domestic service who 
accompany families for a vacation period to take care of the children if 
the duration of such employment does not exceed 6 weeks.
    (c) If the individual performing babysitting services on a ``casual 
basis'' devotes more than 20 percent of his or her time to household 
work during a babysitting assignment, the exemption for ``babysitting 
services on a casual basis'' does not apply during that assignment and 
the individual must be paid in accordance with the Act's minimum wage 
and overtime requirements. This does not affect the application of the 
exemption for previous or subsequent babysitting assignments where the 
20 percent tolerance is not exceeded.
    (d) Individuals who engage in babysitting as a full-time occupation 
are not employed on a ``casual basis.''

[40 FR 7405, Feb. 20, 1975, as amended at 60 FR 46768, Sept. 8, 1995]



Sec. 552.105  Individuals performing babysitting services in their own 
homes.

    (a) It is clear from the legislative history that the Act's new 
coverage of domestic service employees is limited to those persons who 
perform such services in or about the private household of the employer. 
Accordingly, if such services are performed away from the employer's 
permanent, or temporary household there is no coverage under sections 
6(f) and 7(l) of the Act. A typical example would be an individual who 
cares for the children of others in her own home. This type of 
operation, however, could, depending on the particular facts, qualify as 
a preschool or day care center and thus be covered under section 
3(s)(1)(B) of the Act in which case the person providing the service 
would be required to comply with the applicable provisions of the Act.
    (b) An individual in a local neighborhood who takes four or five 
children into his or her home, which is operated as a day care home, and 
who does not have more than one employee or whose only employees are 
members of that individual's immediate family is not covered by the Fair 
Labor Standards Act.

[40 FR 7405, Feb. 20, 1975, as amended at 60 FR 46768, Sept. 8, 1995]



Sec. 552.106  Companionship services for the aged or infirm.

    The term ``companionship services for the aged or infirm'' is 
defined in Sec. 552.6. Persons who provide care and protection for 
babies and young children, who are not physically or mentally infirm, 
are considered babysitters, not companions. The companion must perform 
the services with respect to the aged or infirm persons and not 
generally to other persons. The ``casual'' limitation does not apply to 
companion services.



Sec. 552.107  Yard maintenance workers.

    Persons who mow lawns and perform other yard work in a neighborhood 
community generally provide their own equipment, set their own work 
schedule and occasionally hire other individuals. Such persons will be 
recognized as independent contractors who are not covered by the Act as 
domestic service employees. On the other hand, gardeners and yardmen 
employed primarily by one household are not usually independent 
contractors.



Sec. 552.108  Child labor provisions.

    Congress made no change in section 12 as regards domestic service 
employees. Accordingly, the child labor provisions of the Act do not 
apply unless the underaged minor (a) is individually engaged in commerce 
or in the production of goods for commerce, or (b) is employed by an 
enterprise meeting the coverage tests of sections 3(r) and

[[Page 228]]

3(s)(1) of the Act, or (c) is employed in or about a home where work in 
the production of goods for commerce is performed.



Sec. 552.109  Third party employment.

    (a) Employees who are engaged in providing companionship services, 
as defined in Sec. 552.6, and who are employed by an employer or agency 
other than the family or household using their services, are exempt from 
the Act's minimum wage and overtime pay requirements by virtue of 
section 13(a)(15). Assigning such an employee to more than one household 
or family in the same workweek would not defeat the exemption for that 
workweek, provided that the services rendered during each assignment 
come within the definition of companionship services.
    (b) Employees who are engaged in providing babysitting services and 
who are employed by an employer or agency other than the family or 
household using their services are not employed on a ``casual basis'' 
for purposes of the section 13(a)(15) exemption. Such employees are 
engaged in this occupation as a vocation.
    (c) Live-in domestic service employees who are employed by an 
employer or agency other than the family or household using their 
services are exempt from the Act's overtime requirements by virtue of 
section 13(b)(21). This exemption, however, will not apply where the 
employee works only temporarily for any one family or household, since 
that employee would not be ``residing'' on the premises of such family 
or household.



Sec. 552.110  Recordkeeping requirements.

    (a) The general recordkeeping regulations are found in part 516 of 
this chapter and they require that every employer having covered 
domestic service employees shall keep records which show for each such 
employee: (1) Name in full, (2) social security number, (3) address in 
full, including zip code, (4) total hours worked each week by the 
employee for the employer, (5) total cash wages paid each week to the 
employee by the employer, (6) weekly sums claimed by the employer for 
board, lodging or other facilities, and (7) extra pay for weekly hours 
worked in excess of 40 by the employee for the employer. No particular 
form of records is required, so long as the above information is 
recorded and the record is maintained and preserved for a period of 3 
years.
    (b) In the case of an employee who resides on the premises, records 
of the actual hours worked are not required. Instead, the employer may 
maintain a copy of the agreement referred to in Sec. 552.102. The more 
limited recordkeeping requirement provided by this subsection does not 
apply to third party employers. No records are required for casual 
babysitters.
    (c) Where a domestic service employee works on a fixed schedule, the 
employer may use a schedule of daily and weekly hours that the employee 
normally works and either the employer or the employee may: (1) Indicate 
by check marks, statement or other method that such hours were actually 
worked, and (2) when more or less than the scheduled hours are worked, 
show the exact number of hours worked.
    (d) The employer may require the domestic service employee to record 
the hours worked and submit such record to the employer.



PART 553_APPLICATION OF THE FAIR LABOR STANDARDS ACT TO EMPLOYEES OF 
STATE AND LOCAL GOVERNMENTS--Table of Contents




                            Subpart A_General

                              Introduction

Sec.
553.1 Definitions.
553.2 Purpose and scope.
553.3 Coverage--general.

                     Section 3(e)(2)(C)--Exclusions

553.10 General.
553.11 Exclusion for elected officials and their appointees.
553.12 Exclusion for employees of legislative branches.

        Section 7(o)--Compensatory Time and Compensatory Time Off

553.20 Introduction.
553.21 Statutory provisions.
553.22 ``FLSA compensatory time'' and ``FLSA compensatory time off''.
553.23 Agreement or understanding prior to performance of work.

[[Page 229]]

553.24 ``Public safety'', ``emergency response'', and ``seasonal'' 
          activities.
553.25 Conditions for use of compensatory time (``reasonable period'', 
          ``unduly disrupt'').
553.26 Cash overtime payments.
553.27 Payments for unused compensatory time.
553.28 Other compensatory time.

                            Other Exemptions

553.30 Occasional or sporadic employment--section 7(p)(2).
553.31 Substitution--section 7(p)(3).
553.32 Other FLSA exemptions.

                              Recordkeeping

553.50 Records to be kept of compensatory time.
553.51 Records to be kept for employees paid pursuant to section 7(k).

                          Subpart B_Volunteers

553.100 General.
553.101 ``Volunteer'' defined.
553.102 Employment by the same public agency.
553.103 ``Same type of services'' defined.
553.104 Private individuals who volunteer services to public agencies.
553.105 Mutual aid agreements.
553.106 Payment of expenses, benefits, or fees.

   Subpart C_Fire Protection and Law Enforcement Employees of Public 
                                Agencies

                           General Principles

553.200 Statutory provisions: section 13(b)(20).
553.201 Statutory provisions: section 7(k).
553.202 Limitations.

                         Exemption Requirements

553.210 Fire protection activities.
553.211 Law enforcement activities.
553.212 Twenty percent limitation on nonexempt work.
553.213 Public agency employees engaged in both fire protection and law 
          enforcement activities.
553.214 Trainees.
553.215 Ambulance and rescue service employees.
553.216 Other exemptions.

            Tour of Duty and Compensable Hours of Work Rules

553.220 ``Tour of duty'' defined.
553.221 Compensable hours of work.
553.222 Sleep time.
553.223 Meal time.
553.224 ``Work period'' defined.
553.225 Early relief.
553.226 Training time.
553.227 Outside employment.

                       Overtime Compensation Rules

553.230 Maximum hours standards for work periods of 7 to 28 days--
          section 7(k).
553.231 Compensatory time off.
553.232 Overtime pay requirements.
553.233 ``Regular rate'' defined.

    Authority: Secs. 1-19 52 Stat. 1060, as amended (29 U.S.C. 201-219); 
Pub. L. 99-150. 99 Stat. 787 (29 U.S.C. 203, 207, 211).

    Source: 52 FR 2032, Jan. 16, 1987, unless otherwise noted.



                            Subpart A_General

                              Introduction



Sec. 553.1  Definitions.

    (a) Act or FLSA means the Fair Labor Standards Act of 1938, as 
amended (52 Stat. 1060, as amended; 29 U.S.C. 201-219).
    (b) 1985 Amendments means the Fair Labor Standards Amendments of 
1985 (Pub. L. 99-150).
    (c) Public agency means a State, a political subdivision of a State 
or an interstate governmental agency.
    (d) State means a State of the United States, the District of 
Columbia, Puerto Rico, the Virgin Islands, or any other Territory or 
possession of the United States (29 U.S.C. 203(c) and 213(f)).



Sec. 553.2  Purpose and scope.

    (a) The 1985 Amendments to the Fair Labor Standards Act (FLSA) 
changed certain provisions of the Act as they apply to employees of 
State and local public agencies. The purpose of part 553 is to set forth 
the regulations to carry out the provisions of these Amendments, as well 
as other FLSA provisions previously in existence relating to such public 
agency employees.
    (b) The regulations in this part are divided into three subparts. 
Subpart A interprets and applies the special FLSA provisions that are 
generally applicable to all covered and nonexempt employees of State and 
local governments. Subpart A also contains provisions concerning certain 
individuals (i.e., elected officials, their appointees, and legislative 
branch employees) who are excluded from the definition of

[[Page 230]]

``employee'' and thus from FLSA coverage. This subpart also interprets 
and applies sections 7(o), and 7(p)(2), 7(p)(3), and 11(c) of the Act 
regarding compensatory time off, occasional or sporadic part-time 
employment, and the performance of substitute work by public agency 
employees, respectively.
    (c) Subpart B of this part deals with ``volunteer'' services 
performed by individuals for public agencies. Subpart C applies various 
FLSA provisions as they relate to fire protection and law enforcement 
employees of public agencies.



Sec. 553.3  Coverage--general.

    (a)(1) In 1966, Congress amended the FLSA to extend coverage to 
State and local government employees engaged in the operation of 
hospitals, nursing homes, schools, and mass transit systems.
    (2) In 1972, the Education Amendments further extended coverage to 
employees of public preschools.
    (3) In 1974, the FLSA Amendments extended coverage to virtually all 
of the remaining State and local government employees who were not 
covered as a result of the 1966 and 1972 legislation.
    (b) Certain definitions already in the Act were modified by the 1974 
Amendments. The definition of the term ``employer'' was changed to 
include public agencies and that of ``employee'' was amended to include 
individuals employed by public agencies. The definition of 
``enterprise'' contained in section 3(r) of the Act was modified to 
provide that activities of a public agency are performed for a 
``business purpose.'' The term ``enterprise engaged in commerce or in 
the production of goods for commerce'' defined in section 3(s) of the 
Act was expanded to include public agencies.

                     Section 3(e)(2)(C)--Exclusions



Sec. 553.10  General.

    Section 3(e)(2)(C) of the Act excludes from the definition of 
``employee'', and thus from coverage, certain individuals employed by 
public agencies. This exclusion applies to elected public officials, 
their immediate advisors, and certain individuals whom they appoint or 
select to serve in various capacities. In addition, the 1985 Amendments 
exclude employees of legislative branches of State and local 
governments. A condition for exclusion is that the employee must not be 
subject to the civil service laws of the employing State or local 
agency.



Sec. 553.11  Exclusion for elected officials and their appointees.

    (a) Section 3(e)(2)(C) provides an exclusion from the Act's coverage 
for officials elected by the voters of their jurisdictions. Also 
excluded under this provision are personal staff members and officials 
in policymaking positions who are selected or appointed by the elected 
public officials and certain advisers to such officials.
    (b) The statutory term ``member of personal staff'' generally 
includes only persons who are under the direct supervision of the 
selecting elected official and have regular contact with such official. 
The term typically does not include individuals who are directly 
supervised by someone other than the elected official even though they 
may have been selected by the official. For example, the term might 
include the elected official's personal secretary, but would not include 
the secretary to an assistant.
    (c) In order to qualify as personal staff members or officials in 
policymaking positions, the individuals in question must not be subject 
to the civil service laws of their employing agencies. The term ``civil 
service laws'' refers to a personnel system established by law which is 
designed to protect employees from arbitrary action, personal 
favoritism, and political coercion, and which uses a competitive or 
merit examination process for selection and placement. Continued tenure 
of employment of employees under civil service, except for cause, is 
provided. In addition, such personal staff members must be appointed by, 
and serve solely at the pleasure or discretion of, the elected official.
    (d) The exclusion for ``immediate adviser'' to elected officials is 
limited to staff who serve as advisers on constitutional or legal 
matters, and who are not subject to the civil service rules of their 
employing agency.

[[Page 231]]



Sec. 553.12  Exclusion for employees of legislative branches.

    (a) Section 3(e)(2)(C) of the Act provides an exclusion from the 
definition of the term ``employee'' for individuals who are not subject 
to the civil service laws of their employing agencies and are employed 
by legislative branches or bodies of States, their political 
subdivisions or interstate governmental agencies.
    (b) Employees of State or local legislative libraries do not come 
within this statutory exclusion. Also, employees of school boards, other 
than elected officials and their appointees (as discussed in Sec. 
553.11), do not come within this exclusion.

        Section 7(o)--Compensatory Time and Compensatory Time Off



Sec. 553.20  Introduction.

    Section 7 of the FLSA requires that covered, nonexempt employees 
receive not less than one and one-half times their regular rates of pay 
for hours worked in excess of the applicable maximum hours standards. 
However, section 7(o) of the Act provides an element of flexibility to 
State and local government employers and an element of choice to their 
employees or the representatives of their employees regarding 
compensation for statutory overtime hours. The exemption provided by 
this subsection authorizes a public agency which is a State, a political 
subdivision of a State, or an interstate governmental agency, to provide 
compensatory time off (with certain limitations, as provided in Sec. 
553.21) in lieu of monetary overtime compensation that would otherwise 
be required under section 7. Compensatory time received by an employee 
in lieu of cash must be at the rate of not less than one and one-half 
hours of compensatory time for each hour of overtime work, just as the 
monetary rate for overtime is calculated at the rate of not less than 
one and one-half times the regular rate of pay.



Sec. 553.21  Statutory provisions.

    Section 7(o) provides as follows:

    (o)(1) Employees of a public agency which is a State, a political 
subdivision of a State, or an interstate governmental agency may 
receive, in accordance with this subsection and in lieu of overtime 
compensation, compensatory time off at a rate not less than one and one-
half hours for each hour of employment for which overtime compensation 
is required by this section.
    (2) A public agency may provide compensatory time under paragraph 
(1) only--
    (A) Pursuant to--
    (i) Applicable provisions of a collective bargaining agreement, 
memorandum of understanding, or any other agreement between the public 
agency and representatives of such employees; or
    (ii) In the case of employees not covered by subclause (i), an 
agreement or understanding arrived at between the employer and employee 
before the performance of the work; and
    (B) If the employee has not accrued compensatory time in excess of 
the limit applicable to the employee prescribed by paragraph (3).
    In the case of employees described in clause (A)(ii) hired prior to 
April 15, 1986, the regular practice in effect on April 15, 1986, with 
respect to compensatory time off for such employees in lieu of the 
receipt of overtime compensation, shall constitute an agreement or 
understanding under such clause (A)(ii). Except as provided in the 
previous sentence, the provision of compensatory time off to such 
employees for hours worked after April 14, 1986, shall be in accordance 
with this subsection.
    (3)(A) If the work of an employee for which compensatory time may be 
provided included work in a public safety activity, an emergency 
response activity, or a seasonal activity, the employee engaged in such 
work may accrue not more than 480 hours of compensatory time for hours 
worked after April 15, 1986. If such work was any other work, the 
employee engaged in such work may accrue not more than 240 hours of 
compensatory time for hours worked after April 15, 1986. Any such 
employee who, after April 15, 1986, has accrued 480 or 240 hours, as the 
case may be, of compensatory time off shall, for additional overtime 
hours of work, be paid overtime compensation.
    (B) If compensation is paid to an employee for accrued compensatory 
time off, such compensation shall be paid at the regular rate earned by 
the employee at the time the employee receives such payment.
    (4) An employee who has accrued compensatory time off authorized to 
be provided under paragraph (1) shall, upon termination of employment, 
be paid for the unused compensatory time at a rate of compensation not 
less than--
    (A) The average regular rate received by such employee during the 
last 3 years of the employee's employment, or
    (B) The final regular rate received by such employee, whichever is 
higher.

[[Page 232]]

    (5) An employee of a public agency which is a State, political 
subdivision of a State, or an interstate governmental agency--
    (A) Who has accrued compensatory time off authorized to be provided 
under paragraph (1), and
    (B) Who has requested the use of such compensatory time, shall be 
permitted by the employee's employer to use such time within a 
reasonable period after making the request if the use of the 
compensatory time does not unduly disrupt the operations of the public 
agency.
    (6) For purposes of this subsection--
    (A) The term overtime compensation means the compensation required 
by subsection (a), and
    (B) The terms compensatory time and compensatory time off means 
hours during which an employee is not working, which are not counted as 
hours worked during the applicable workweek or other work period for 
purposes of overtime compensation, and for which the employee is 
compensated at the employee's regular rate.

[52 FR 2032, Jan. 16, 1987; 52 FR 2648, Jan. 23, 1987]



Sec. 553.22  ``FLSA compensatory time'' and ``FLSA compensatory time 
off''.

    (a) Compensatory time and compensatory time off are interchangeable 
terms under the FLSA. Compensatory time off is paid time off the job 
which is earned and accrued by an employee in lieu of immediate cash 
payment for employment in excess of the statutory hours for which 
overtime compensation is required by section 7 of the FLSA.
    (b) The Act requires tha