(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.
(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
1215-0122)
[18 FR 3292, June 10, 1953, as amended at 47 FR 145, Jan. 5, 1982]
