(a) A special exemption is provided in section 13(b)(18) of the Act
for certain food or beverage service employees of retail or service
establishments. This section excludes from the overtime pay provisions
in section 7 of the Act, ``any employee of a retail or service
establishment who is employed primarily in connection with the
preparation or offering of food or beverages for human consumption,
either on the premises, or by such services as catering, banquet, box
lunch, or curb or counter service, to the public, to employees, or to
members or guests of members of clubs.'' This is an employee exemption,
intended to apply to employees engaged in the named activities for such
establishments as ``drug stores, department stores, bowling alleys, and
the like.'' (S. Rept. No. 1487, 89th Cong., second session, p. 32.)
(b) The 13(b)(18) exemption will apply only if the following two
tests are met:
(1) The employee must be an employee of a retail or service
establishment (as defined in section 13(a)(2) of the Act); and
(2) The employee must be employed primarily in connection with the
specified food or beverage service activities. If both of the above
criteria are met, the employee is exempt from the overtime pay
provisions of the Act.
(c) The establishment by which the employee is employed must be a
``retail or service establishment.'' This term is defined in section
13(a)(2) of the Act and the definition is quoted in Sec. 779.24; the
application of the definition is considered at length earlier in this
subpart. In accordance with this definition, the establishment will be a
``retail or service establishment'' for purposes of section 13(b) (18)
if 75 percent or more of the establishment's annual dollar volume of
sales of goods or services (or of both) is not for resale and is
recognized as retail sales or services in the particular industry.
(d) If the establishment comes within the above definition it is
immaterial that the establishment is in an enterprise or part of an
enterprise described in section 3(s). Thus section 13(b)(18) will be
applicable regardless of the annual dollar volume of sales of the
establishment or of the enterprise of which it is a part. It should also
be noted that it is not required that the establishment make more than
50 percent of its annual dollar volume of sales within the State in
which it is located. The establishment by which the employee is
employed, provided it qualifies as a ``retail or service
establishment,'' may be a drug store, department store, cocktail lounge,
night club, and the like.
(e) This exemption does not apply to employees of the ordinary
bakery or grocery store who handle, prepare or sell food or beverages
for human consumption since such food or beverages are not prepared or
offered for consumption ``on the premises, or by such services as
catering, banquet, box lunch, or curb or counter service * * *.''
(f) If the establishment by which the employee is employed is a
``retail or service establishment,'' as explained above, he will be
exempt under section 13(b)(18) provided he is employed primarily in
connection with the preparation or offering of food or beverages for
human consumption either on the premises, or by such services as
catering, banquet, box lunch, or curb or counter service, to the public,
to employees, or to members or guests of members of clubs. An employee
employed in the actual preparation or serving of the food or beverages
or in activities closely related and directly essential to the
preparation and serving will be regarded as engaged in the described
activities. The exemption, therefore, extends not only to employees
actually cooking, packaging or serving food or beverages, but also to
employees such as cashiers, hostesses, dishwashers, busboys, and cleanup
men. Also, where the food or beverages are served away from the
establishment, the exemption extends to employees of the retail or
service establishment who make ready the serving place, serve the food,
clean up, and transport the equipment, food and beverages to and from
the serving place.
(g) For the exemption to apply, the employee must be engaged
``primarily'' in performing the described activities. A sales clerk in a
drug store, department store or other establishment, who as an incident
to his other duties, occasionally prepares or otherwise handles food or
beverages for human consumption on the premises will not come within the
scope of this exemption. The exemption is intended for employees who
devote all or most of their time to the described food or beverage
service activities. For administrative purposes this exemption will not
be considered defeated for an employee in any workweek in which he
devotes more than one-half of his time worked to such activities.
