(a) Only those sales or services to which the retail concept applies
may be recognized as retail sales of goods or services for purposes of
the exemption. The fact that the particular establishment may have a
concept of retailability, in that it makes sales of types which may be
recognized as retail, is not determinative unless the requisite portion
of its annual dollar volume is derived from particular sales of its
goods and services which have a concept of retailability. Thus, the mere
fact that an establishment is of a type noted in Sec. 779.320 does not
mean that any particular sales of such establishment are within the
retail concept. As to each particular sale of goods or services, an
initial question that must be answered is whether the sales of goods or
services of the particular type involved can ever be recognized as
retail. The Supreme Court in Wirtz v. Steepleton General Tire Co., 383
U.S. 190, confirmed the Department's position that (1) The concept of
``retailability'' must apply to particular sales of the establishment,
as well as the establishment or business as a whole, and (2) even as to
the establishment whose sales are ``variegated'' and include retail
sales, that nonetheless classification of particular sales of goods or
services as ever coming within the concept of retailability must be
made. Sales of some particular types of goods or services may be
decisively classified as nonretail on the ground that such particular
types of goods or services cannot ever qualify as retail whatever the
terms of sale, regardless of the industry usage or classification.
(b) An establishment is, therefore, not automatically exempt upon a
finding that it is of the type to which the retail concept of selling or
servicing is applicable; it must meet all the tests specified in the Act
in order to qualify for exemption. Thus, for example, an establishment
may be engaged in repairing household refrigerators, and in addition it
may be selling and repairing manufacturing machinery for manufacturing
establishments. The retail concept does not apply to the latter
activities. In such case, the exemption will not apply if the annual
dollar volume derived from the selling and servicing of such machinery,
and from any other sales and services which are not recognized as retail
sales or services, and from sales of goods or services for resale
exceeds 25 percent of the establishment's total annual dollar volume of
sales of goods or services.
(c) Since there is no retail concept in the construction industry,
gross receipts from construction activities of any establishment also
engaged in retail selling must be counted as dollar
volume from sales not recognized as retail in applying the percentage
tests of section 13(a)(2). Also, since construction and the distribution
of goods are entirely dissimilar activities performed in industries
traditionally recognized as wholly separate and distinct from each
other, an employee engaged in construction activities is not employed
within the scope of his employer's otherwise exempt retail business in
any week in which the employee engages in such construction work, and is
therefore (see Sec. 779.308) not employed ``by'' a retail or service
establishment within the meaning of the Act in such workweek.
(d) Certain business establishments engage in the retail sale to the
general public, as goods delivered to purchasers at a stipulated price,
of items such as certain plumbing and heating equipment, electrical
fixtures and supplies, and fencing and siding for residential
installation. In addition to selling the goods they may also install, at
an additional charge, the goods which are sold. Installation which is
incidental to a retail sale (as distinguished from a construction or
reconstruction contract to do a building alteration, or repair job at a
contract price for materials and labor required, see Sec. 779.355(a)(1)
is considered an exempt activity. By way of example, if the installation
for the customer of such goods sold to him at retail requires only minor
carpentry, plumbing or electrical work (as may be the case where
ordinary plumbing fixtures, or household items such as stoves, garbage
disposals, attic fans, or window air conditioners are being installed or
replaced), or where only labor of the type required for the usual
installation of chain link fences around a home or small business
establishment is involved, will normally be considered as incidental to
the retail sale of the goods involved (unless, of course, the
transaction between the parties is for a construction job at an overall
price for the job, involving no retail sale of goods as such). In
determining whether such an installation is incidental to a retail sale
or constitutes a nonretail construction activity, it is necessary to
consider the general characteristics of the entire transaction. Where
one or more of the following conditions are present, the installation
will normally be considered a construction activity rather than
incidental to a retail sale:
(1) The cost to the purchaser of the installation in relation to the
sale price of the goods is substantial;
(2) The installation involves substantial structural changes,
extensive labor, planning or the use of specialized equipment;
(3) The goods are being installed in conjunction with the
construction of a new home or other structure; or
(4) The goods installed are of a specialized type which the general
consuming public does not ordinarily have occasion to use.
(e) An auxiliary employee of an exempt retail or service
establishment performing clerical, maintenance, or custodial work in the
exempt establishment which is related to the establishment's
construction activities will, for enforcement purposes, be considered
exempt in any workweek if no more than 20 percent of his time is spent
in such work.
