(a) General. The specific exemption from the provisions of sections
6 and 7 of the Act that was provided in section 13(a)(19) prior to the
1966 amendments for employees of a retail or service establishment which
is primarily engaged in the business of selling automobiles, trucks, or
farm implements was repealed. However, some such establishments may
qualify for exemption from both the minimum wage and overtime pay
provisions of the Act under section 13(a)(2) as retail or service
establishments. These are establishments whose annual dollar volume is
smaller than the amount specified in section 13(a)(2) or in section
3(s)(1) and which meet all the other requirements of section 13(a)(2)
(see Sec. 779.337). (Such establishments which do not qualify for
exemption under section 13(a)(2) may have certain employees who are
exempt only from the overtime pay provisions of the Act under section
13(b)(10). Section 13(b)(10) is applicable not only to automobile,
truck, and farm implement dealers but also to dealers in trailers and
aircraft. The section 13(b)(10) exemption is discussed in Sec. 779.372
below.)
(b) Application of the 75-percent test. In determining whether,
under the section 13(a)(2) exemption, 75 percent of an automobile,
truck, or farm implement establishment's sales of goods or services are
not for resale and are recognized as retail, the requirements for such
classification, including the existence of a retail concept, as
explained
previously in this subpart, and the specific applications in the
industry of these requirements in accordance with the following
principles, will govern the classification of sales made by such
establishments. The sales of goods or services described in paragraph
(c) of this section and in paragraphs (e)(1) through (5) of this section
may not be counted toward the required 75 percent. Such sales do not
qualify as retail because they either are for resale, are outside the
retail concept, or have been determined to lack the requisite
recognition as retail sales or services. Other sales of goods or
services by the dealer can qualify if they meet the requirements
previously explained.
(c) Nonretail automobile and truck sales and servicing. None of the
following sales of automobiles, trucks, automotive parts, accessories,
servicing and repair work will be considered as retail:
(1) Sales for resale. For example, sales of new or used automobiles
and trucks, tires, accessories or services, to service stations, repair
shops and automobile or truck dealers, where these establishments resell
the various items or where they use them in repairing customers'
vehicles or in reconditioning used cars for resale, are sales for
resale. (Note that a ``sale'' for purposes of the Act need not be for
profit under section 3(k) it includes any ``exchange * * * or other
disposition''.) However, internal transfers of such items between
departments within the dealer's establishment, such as transfers of
parts from the parts department to the service department of an
automobile dealer's establishment, will not be considered sales for
resale. Such transfers from one department to another will be
disregarded in computing the establishment's sales for determining the
applicability of this exemption.
(2) Sales made pursuant to a formal invitation to bid. Such sales
are made under a procedure involving the issuance by the buyer of a
formal invitation to bid on certain merchandise for delivery in
accordance with prescribed terms and specifications. Sales to the
Federal, State, and local governments are typically made in this manner.
(3) Fleet sales. Sales in a fleet quantity for business purposes (a
sale of five or more cars or trucks at a time, for example); and sales
to fleet accounts as described in paragraphs (c)(3) (i) and (ii) of this
section. (As here used, a ``fleet account'' is a customer operating five
or more automobiles or trucks for business purposes.)
(i) Automobiles and trucks. Sales and term leases of automobiles and
trucks to national fleet accounts as designated by the various
automotive manufacturers, at fleet discounts, and sales and term leases
to other fleet accounts at discounts equivalent to those provided in
sales to national fleet owners are not recognized as retail.
(ii) Automotive parts and accessories. Sales of parts and
accessories to fleet accounts at wholesale prices are not recognized as
retail. Wholesale prices are prices equivalent to, or less than, those
typically charged on sales for resale.
(4) Sales and term leases of specialized heavy motor vehicles or
bodies (16,000 pounds and over gross vehicle weight) and of tires,
parts, and accessories designed for use on such specialized equipment.
The following is a partial list illustrating the types of items of
equipment not considered to qualify as subjects of retail sale:
(i) Single unit trucks, including:
Armored (money carrying).
Buses (integral).
Coal.
Drilling.
Dump.
Hook and ladder (fire department).
Chemical wagons (fire department).
Garbage.
Mixer.
Refrigerator.
Special public utility.
Steel haulers.
Street-cleaning.
Tank.
Wrecker.
(ii) Full trailers and semitrailers (tractors and semitrailer and
truck and trailer combinations), including:
Auto carrier.
Coal.
Dump.
Garbage.
House carrier.
Low bed carry all.
Pole (lumber).
Refrigerator.
Tank.
Van.
(5) Sales of servicing and repair work peculiar to the servicing and
repair of specialized vehicles referred to in paragraph (c)(4) of this
section, or performed under a fleet maintenance arrangement on trucks
and other automotive vehicles whereby the establishment undertakes to
maintain a customer's fleet at a price below the prevailing retail
prices.
(6) Sales to motor carriers of services, fuel, equipment, or other
goods or facilities by establishments commonly referred to as truck
stops. Such establishments, which are physically laid out and specially
equipped to meet the highway needs of the motor transportation industry,
offer a variety of services to truckers on a ``one-stop'' basis, and
provide services principally to motor carriers and their crews. They are
an integral part of the interstate transportation industry and are not
within the traditional retail establishments (see paragraphs (c) (4) and
(5) of this section).
(7) Sales of diesel fuel (and LP gas) for use as truck or bus fuel
and the repair and servicing of trucks and buses used in over-the-road
commercial transportation (including parts and accessories for such
vehicles) are specialized goods and services ``which can never be sold
at retail * * * whatever the terms of the sale.'' (Idaho Sheet Metal
Works, Inc. v. Wirtz, 383 U.S. 190, 202, rehearing denied 383 U.S. 963;
Wirtz v. Steepleton General Tire Company, Inc., 383 U.S. 190, 202,
rehearing denied 383 U.S. 963.) Sales of these items are nonretail
whether made by truck stops or other establishments (see paragraphs (c)
(4) and (5) of this section).
(d) Nonspecialized truck parts, accessories and services. Sales of
parts and accessories which are of the type used by small trucks engaged
in local transportation or by farm vehicles and are not nonretail under
paragraph (c)(6) of this section will be tested under paragraphs (b) and
(c)(3) (ii) of this section, even when made on occasion for use in
larger vehicles. Likewise, repairs and servicing of a minor nature (such
as tire repair, battery recharging, cleaning of fuel lines, or minor
electrical rewiring) performed on any type vehicle will be considered
retail in nature unless nonretail under paragraph (c)(6) of this section
or unless a fleet maintenance arrangement as in paragraph (c)(5) of this
section is present.
(e) Farm implement sales. Sales of farm machinery, such as equipment
necessary for plowing, planting, thinning, weeding, fertilizing,
irrigating, and harvesting of crops, and raising of livestock on the
farm, and the repair work thereon, will be considered as retail (whether
sold to farmers or nonfarmers) when they satisfy the tests referred to
in paragraph (b) of this section. The following, which fail to satisfy
these tests, must be classified as nonretail:
(1) Sales for resale. For example, sales of new or used machinery,
parts, accessories or services to service stations, repair shops and
other dealers, where these establishments resell these items or where
they use them in repairing customers' farm implements or in
reconditioning used farm implements for resale, are sales for resale.
However, this does not apply to internal transfers of such items between
departments within the dealer's establishment. Transfers of parts from
the parts department to the service department of a farm implement
dealer's establishment will not be considered sales for resale, and will
be disregarded in computing the establishment's sales for determining
the applicability of the section 13(a)(2) exemption.
(2) Sales made pursuant to formal invitation to bid. Such sales are
made under a procedure involving the issuance by the buyer of a formal
invitation to bid on certain merchandise for delivery in accordance with
prescribed terms and specifications. Sales to Federal, State and local
governments are typically made in this manner.
(3) Sales of specialized equipment not ordinarily used by farmers,
such as:
Bulldozers.
Scrapers.
Land levelers.
Graders.
Cotton ginning machinery.
Canning and packing equipment.
(4) Sales of junk.
(5) Sales of machinery or equipment which are sold ``installed'',
where the installation involves construction work. Installations which
require extensive planning, labor and use of specialized equipment
ordinarily constitute construction work. In such cases the cost of
installation ordinarily is substantial in relation to the cost of the
goods installed.
(f) Quantity sales to farmers. It should be noted that the concept
of fleet sales discussed in paragraphs (c)(3) and (5) of this section is
not applied to sales to farmers, even though the farmer uses five or
more vehicles on his farm.
(g) Particular activities which lack a retail concept. Any receipts
derived from warehousing, construction, including water well drilling,
or manufacturing activities performed by the automobile, truck, or farm
implement dealer are not receipts from retail sales. These activities
and the manufacturing of farm implements are not retail activities.
