Although, as stated in the preceding section, two or more
departments of a business may constitute a single establishment, two or
more physically separated portions of a business though located on the
same premises, and even under the same roof in some circumstances may
constitute more than one establishment for purposes of exemptions. In
order to effect such a result physical separation is a prerequisite. In
addition, the physically separated portions of the business also must be
engaged in operations which are functionally separated from each other.
Since there is no such functional separation between activities of
selling goods or services at retail, the Act recognizes that food
service activities of such retail or service establishments as
drugstores, department stores, and bowling alleys are not performed by a
separate establishment which ``is'' a ``restaurant'' so as to qualify
for the overtime exemption provided in section 13(b)(8) and accordingly
provides a separate overtime exemption in section 13(b)(18) for
employees employed by any ``retail or service establishments'' in such
activities in order to equalize the application of the Act between
restaurant establishments and retail or service establishments of other
kinds which frequently compete with them for customers and labor. (See
Sen. Rept. 1487, 89th Cong. first session, p. 32.) For retailing and
other functionally unrelated activities performed on the same premises
to be considered as performed in separate establishments, a distinct
physical place of business engaged in each category of activities must
be identifiable. The retail portion of the business must be distinct and
separate from and unrelated to that portion of the business devoted to
other activities. For example, a firm may engage in selling groceries at
retail and at the same place of business be engaged in an unrelated
activity, such as the incubation of chicks for sale to growers. The
retail grocery portion of the business could be considered as a separate
establishment for purposes of the exemption, if it is physically
segregated from the hatchery and has separate employees and separate
records. In other words, the retail portion of an establishment would be
considered a separate establishment from the unrelated portion for the
purpose of the exemption if (a) It is physically separated from the
other activities; and (b) it is functionally operated as a separate unit
having separate records, and separate bookkeeping; and (c) there is no
interchange of employees between the units. The requirement that there
be no interchange of employees between the units does not mean that an
employee of one unit may not occasionally, when circumstances require
it, render some help in the other units or that one employee of one unit
may not be transferred to work in the other unit. The requirement has
reference to the indiscriminate use of the employee in both units
without regard to the segregated functions of such units.
