(a) The 1961 amendments to the Fair Labor Standards Act narrowed the
exemption for retail or service establishments by permitting section
13(a)(2) to be applied only to an establishment which was not in a
covered enterprise, or (if it was in such an enterprise) which had an
annual gross volume of sales of less than $250,000 (exclusive of
specified taxes). There were certain exemptions to this general
principle. These exceptions were set out in section 13(a)(2)(ii) and
(iii). The establishments enumerated therein were exempt whether or not
they were in a covered enterprise and regardless of the annual dollar
volume of sales. They were: Hotels, motels, restaurants, motion picture
theaters, seasonally operated
amusement or recreational establishments, hospitals, institutions
primarily engaged in the care of the sick, the aged, the mentally ill or
defective residing on the premises of the institution, and schools for
physically or mentally handicapped or gifted children. These
establishments were exempt if they met the basic 50 percent in State
sales test and the 75 percent retail sales test of section 13(a)(2). The
1966 amendments to the Act repealed sections 13(a)(2)(ii) and (iii). Now
to be exempt under section 13(a)(2) hotels, motels, and restaurants must
meet the same tests as other retail or service establishments (see
Sec. 779.337). Seasonal amusement or recreational establishments and
motion picture theaters now have special exemptions from both the
minimum wage and overtime pay provisions of the Act as provided by the
1966 amendments in sections 13(a)(3) and 13(a)(9) respectively.
(b) Certain establishments which were previously exempt under
section 13(a)(2) prior to the 1966 amendments have been specifically
excluded from this exemption as a result of the amendments, even though
they may still qualify as retail or service establishments under the
definition of such an establishment in that section. These are
hospitals, institutions primarily engaged in the care of the sick, the
aged, the mentally ill or defective residing on the premises of the
institution, and schools for physically or mentally handicapped or
gifted children. However, such institutions have been recognized as
having a retail concept and where the nature of their operations has not
changed and where they otherwise satisfy the Act's definition of a
``retail or service establishment'', certain food service employees
employed by such institutions will be considered to be exempt from the
Act's overtime pay provisions under section 13(b)(18), exemptions for
their administrative or executive employees will not be defeated by
nonexempt work occupying less than 40 percent of the employee's time,
and full-time students may be employed in accordance with the special
minimum wage provisions of section 14 of the Act and part 519 of this
chapter.
