(a) Where the employer's business operations are conducted in more
than one establishment, as in the various units of a chain-store system
or where branch establishments are operated in
conjunction with a main store, the employer is entitled to exemption
under section 13(a)(2) or (4) for those of his employees in such
business operations, and those only, who are ``employed by'' an
establishment which qualifies for exemption under the statutory tests.
For example, the central office or central warehouse of a chain-store
operation even though located on the same premises as one of the chain's
retail stores would be considered a separate establishment for purposes
of the exemption, if it is physically separated from the area in which
the retail operations are carried on and has separate employees and
records. (Goldberg v. Sunshine Department Stores, 15 W.H. Cases 169 (CA-
5) Mitchell v. Miller Drugs, Inc., 255 F. 2d 574 (CA-1); Walling v.
Goldblatt Bros., 152 F. 2d 475 (CA-7).)
(b) Under this test, employees in the warehouse and central offices
of chainstore systems have not been exempt prior to, and their nonexempt
status is not changed by, the 1961 amendments. Typically, chain-store
organizations are merchandising institutions of a hybrid retail-
wholesale nature, whose wholesale functions are performed through their
warehouses and central offices and similar establishments which
distribute to or serve the various retail outlets. Such central
establishments clearly cannot qualify as exempt establishments. (A. H.
Phillips, Inc. v. Walling, 324 U.S. 490; Mitchell v. C & P Stores, 286
F. 2d 109 (CA-5).) The employees working there are not ``employed by''
any single exempt establishment of the business; they are, rather,
``employed by'' an organization of a number of such establishments.
Their status obviously differs from that of employees of an exempt
retail or service establishment, working in a warehouse operated by and
servicing such establishment exclusively, who are exempt as employees
``employed by'' the exempt establishment regardless of whether or not
the warehouse operation is conducted in the same building as the selling
or servicing activities.
