(a) Employees who may be exempt under sections 13(a)(2) and
13(a)(4). These exemptions apply on an establishment basis (see
Secs. 779.302--779.306). Accordingly, where an establishment of a dealer
in lumber and building materials qualifies as an exempt retail or
service establishment under section 13(a)(2) or as an exempt
establishment under section 13(a)(4), as explained in Sec. 779.354, the
exemption from the minimum wage and overtime pay requirements of the Act
provided by such section will apply, subject to the limitations
hereafter noted in this section, to all employees who are employed
``by'' such establishment (see Secs. 779.307--779.311) in activities
within the scope of its business (Sec. 779.308) and who are not employed
by the employer in performing central office or warehouse work of an
organization operating several such establishments (Sec. 779.310; McComb
v. W. E. Wright Co., 168 F. 2d 40, cert. denied 335 U.S. 854). Neither
exemption extends to employees employed in performing the work of a
nonexempt establishment (Sec. 779.311) or such activities as
construction work. Employees employed in making and processing of lumber
and building materials for sale do not come within the section 13(a)(2)
exemption; they are exempt only if employed by an establishment which
qualifies as an exempt establishment under section 13(a)(4) as explained
in Sec. 779.354 and if their work in the making or processing of such
materials is done at such establishment. How duties relating to the
processing or manufacturing of such materials affect the application of
these exemptions is discussed in further detail in paragraphs (b) and
(c) of this section.
(b) Processing and manufacturing activities. The performance, in an
establishment which sells lumber and building materials at retail, of
activities such as cutting lumber to a smaller size or dressing lumber
in accordance with a customer's request or assembling window and door
frames received in ``knocked-down'' condition, constitutes processing
incidental to the sales of such materials. Such activities are not
considered manufacturing and will not affect the applicability of the
section 13(a)(2) exemption to the establishment or to the employees who
perform them. However, whenever lumber is cut or dressed for sale, or
fabricated products are manufactured for sale (for example, windows,
door frames, benches, pig troughs, pallets, molding, sashes, cabinets,
boxes), there is no exemption under section 13(a)(2). Employees
performing such manufacturing activities at the establishment are exempt
only if all the tests set forth in section 13(a)(4) are met (see pars.
(b), (c), and (d) of Sec. 779.354). Employees engaged in such activities
at a manufacturing plant, central yard, or other place not qualifying as
an exempt establishment under section 13(a) (2) and (4) are not exempt.
(c) Employees serving exempt and nonexempt operations. In lumber and
building materials establishments which qualify for exemption under
section 13(a)(2) but engage in some activities in which their employees
are not exempt, such as construction or the making or processing of
materials for sale where no exemption under section 13(a)(4) is
applicable, there may be auxiliary employees of the establishment whose
duties relate to both the exempt sales portion of the business and the
non-exempt operations. For example, office workers may keep records of
both the retail sales and construction or manufacturing activities;
custodial workers
may clean the entire premises, including portions devoted to nonexempt
manufacturing; and warehousemen, messengers, and stock clerks may handle
material for all departments, including material used in the nonexempt
operations. These employees do not qualify for the exemption except when
they are primarily engaged in the sales portion of the business and only
incidentally perform clerical, custodial, or messenger service for the
other operations. As an enforcement policy, such an employee will not be
considered to be engaged in nonexempt activities which render him
ineligible for exemption under section 13(a)(2) if, in the particular
workweek, an insubstantial amount of his time (20 percent or less) is
allocable to the clerical, custodial, or messenger services performed by
him which relate to such nonexempt operations of the employer.
