EDMOND MORELAND

A Primer on the FLSA § 7(i) Retail Sales Exemption

34 • THE FEDERAL LAWYER • July 2017

A Primer on the FLSA § 7(i) Retail Sales Exemption This article explores the statutory exemption found at 29 U.S.C.

§ 207(i), and commonly known as the “retail sales exemption,” “retail

or service establishment exemption,” “commissioned salesperson

exemption,” or “7(i) exemption.”

Traditionally, the 7(i) exemption applied primarily to employees

who sell “big ticket” items, such as “furniture, bedding and home

furnishings, floor covering, draperies,” et cetera.4 More recently,

however, courts have found that it applies to a broader cross-sec-

tion of workers. This trend is likely to continue, particularly in our

increasingly service-based economy. For example, courts have more

recently applied it to computer trainers, cable installers, window

washers, precious metal salespeople, and individuals who sell and de-

liver industrial cleaning products. Yet, the 7(i) exemption continues

to be a source of complexity and confusion, particularly as it relates

to whether an employer is a “retail or service establishment” entitled

to avail itself of the exemption. Indeed, the “retail” dimensions of the

exemption—perhaps at least to the extent that the “primary duty”

problems posed by the executive, administrative, and professional

exemptions at 29 U.S.C. Part 541—has proven somewhat elusive and

difficult to grasp, both by courts and lawyers.

There are three general elements that an employer must prove5

in order to avail itself of the 7(i) exemption. Those elements are that:

1. The employee is employed in a “retail or service establish-

ment”;

2. The employee’s regular rate of pay is more than 150 percent of

the minimum wage; and

3. More than one-half of an employee’s total compensation for a

“representative period” is composed of commissions.6

The second of these elements is often a straightforward math

problem requiring the calculation of the employee’s pay on an hourly

basis and ensuring that it exceeds 150 percent of the minimum wage

(which is currently equal to $10.88 per hour).7 As for the third ele-

ment, while there are interesting issues surrounding the meaning of

“representative period”8 and whether a payment is a bona fide com-

mission,9 that is often a fairly straightforward math problem as well.

This article does not focus on the finer points of these matters.

Instead, because it does seem to pose the most difficulty, this article’s

focus is on the first “retail” element of the exemption. The goal here

is to pull together the statutory, regulatory, and some of the more

recent court authority on the retail aspects of the § 7(i) exemption

and to ultimately attempt to distill a common theme among the cases

in which courts have found the exemption applicable versus those in

which they have not. It is not an overstatement to say that applica-

tion of the 7(i) exemption can result in a byzantine analysis. A full

analysis of all of the manifold issues and sub-issues involved in these

cases is beyond the scope of this article.

With these matters in mind, this article will first discuss the

statutory and regulatory authority on which courts most often rely to

answer the “retail” question. Then it will turn to a discussion of a se-

lection of recent cases in which courts have found a “retail” concept,

and then cases in which the court did not find one. Next, there is a

brief discussion of a potentially emerging theory in these cases based

on a recent Seventh Circuit opinion. Finally, the article will conclude

with an attempt to formulate a broad theory about which employees

are employed in a “retail” establishment, and which are not, under §

7(i).

Statutory and Regulatory AuthoritySection 7(i) of the FLSA provides that:

No employer shall be deemed to have violated [the overtime

provision of the FLSA] by employing any employee of a retail

or service establishment for a workweek in excess of the

applicable workweek specified therein, if (1) the regular rate

of pay of such employee is in excess of one and one-half times

the minimum hourly rate applicable to him under section 206

of this title, and (2) more than half his compensation for a

representative period (not less than one month) represents

commissions on goods or services. In determining the propor-

tion of compensation representing commissions, all earnings

resulting from the application of a bona fide commission rate

shall be deemed commissions on goods or services without re-

gard to whether the computed commissions exceed the draw

or guarantee. (Emphasis added.)

The statute is clear: if an employer does not employ the employee

in a “retail or service establishment,” then it may not avail itself of

this exemption. Conversely, if it is a “retail or service establishment,”

and it meets the other elements, then the employee is exempt. How

courts answer the “retail” question is obviously important.

Courts almost uniformly apply the regulations10 found at 29 C.F.R.

Part 779 to answer the question of whether an employee is employed

in a “retail or service establishment.”11

Those regulations were promulgated to interpret the now-re-

The Fair Labor Standards Act1 (FLSA) generally requires employers to pay employees a minimum wage and overtime compensation at the rate of at

least one and one-half times the regular rate of pay for all hours worked over 40 in a workweek.2 The act exempts certain employees from its minimum wage and overtime requirements.3 If an employee is exempt, then he or she is not entitled to the overtime and/or minimum wage protections of the FLSA.

July 2017 • THE FEDERAL LAWYER • 35

pealed 29 U.S.C. § 213(a)(2), which used and defined the same

phrase—“retail or service establishment”—as that found at § 7(i).

Congress passed and, over the years, refined § 213(a)(2) primarily in

order to remove from the purview of the FLSA small and purely (or

primarily in the case of mom-and-pop stores located near state lines)

intrastate businesses.12 Congress repealed § 213(a)(2) in 1989, but

its regulations remain at Part 779 of Title 29 of the Code of Federal

Regulations.

Congress added 29 U.S.C. § 207(i) with the 1961 amendments to

the FLSA. The legislative history of that amendment strongly sug-

gests that Congress intended that the § 213(a)(2) definition of “retail

or service establishment” should be used to interpret that same

phrase under § 7(i).13 It is for this reason that most courts apply

the Part 779 regulations. However, in a recent opinion, Alvarado v.

Corporate Cleaning Services Inc., the Seventh Circuit broke with

the majority and declined to apply the Part 779 regulations.14

Applying the § 213(a)(2) regulations, a “retail or service estab-

lishment” is (1) “an establishment” “in which (2) 75 percent of the

annual dollar volume of sales of goods or services is ‘not for resale’

and (3) ‘is recognized as retail sales or services in the particular

industry.’”15 There is no bright-line rule for determining whether an

establishment is a “retail or service establishment.”16 Whether an

establishment is a “retail or service establishment” is a question of

law for the court.17

Discussing these three elements in turn, an “establishment”

means “a distinct physical place of business….”18 It must be “ordi-

narily available to the generally consuming public,” and, not surpris-

ingly, the weight of authority is that establishments available through

telephone or internet are so available.19 That an employer lacks a

brick-and-mortar storefront is not dispositive.

In addition, “the term ‘establishment’ … is not synonymous with

the words ‘business’ or ‘enterprise’ when those terms are used to

describe multiunit operations. In such a multiunit operation some

of the establishments may qualify for exemption, others may not.”20

Thus, a single employer may have employees in different units of its

operation who have identical pay structures, but employees of one

unit may be exempt because they are employed in a “retail” estab-

lishment, while others may be nonexempt because they are not.

Finally, in order to avail itself of the 7(i) exemption, a “service

establishment” must be a “retail … service establishment.”21 In other

words, the employer does not get the benefit of the exemption if it is

either a “retail establishment” or a “service establishment.” It must

offer “retail services.” From a grammatical perspective, then, “retail”

in the statute modifies both “service” and “establishment.”

The 75 percent “not for resale” prong is not one that lends itself

to a detailed discussion here, since whether a business meets that

threshold will be made on a case by case basis. There are several

general observations that are appropriate, however. For example,

purely or primarily wholesale operations are not retail establishments

since their products are specifically sold for resale.

In addition, a related issue that tends to arise in these cases is

whether an employer can market and sell mainly or exclusively to

other businesses and still be a “retail or service establishment.” After

all, the traditional notion of a retail outlet is a purveyor of goods or

services used in the everyday lives of everyday folks. However, while

business to business transactions are not per se non-retail, the Su-

preme Court has observed that “the list of strictly commercial items

whose sale can be deemed retail is presumably very small….”22

As for the relatively uncontroversial regulatory authority on the 75

percent “not for resale” element, (1) “sale” means “any sale, exchange,

contract to sell, consignment for sale, shipment for sale, or other

disposition,”23 and (2) “resale” means “selling again.”24 “A sale is made

for resale where the seller knows or has reasonable cause to believe

that the goods or services will be resold, whether in their original form,

or in an altered form, or as a part, component or ingredient of another

article. Where the goods or services are sold for resale, it does not

matter what ultimately happens to such goods or services.”25

It is the third element that will occupy the balance of this article.

The test for whether an establishment is recognized as retail in its in-

dustry involves two broad inquiries: (1) does the establishment have

a “retail concept” and (2) is the establishment recognized as retail in

its particular industry?26

The regulations provide lists of both retail and non-retail estab-

lishments.27 In addition, the Department of Labor (DOL) has issued

several opinion letters discussing several specific industries.28 Pre-

sumably because an establishment’s inclusion on either the lists or

in a DOL opinion letter makes for a difficult argument on one side of

a case, the lists and letters are rarely dispositive in reported cases of

whether an establishment is retail. To the extent that the employer’s

operations are analogous to an industry on the lists or in the letters,

courts tend to view them as persuasive.

In the absence of an applicable regulation or letter, courts apply

the regulations at 29 C.F.R. § 779.318. An establishment has a “retail

concept” if (1) it sells to the general public, (2) serves the everyday

needs of the community in which it is located by providing for the

comfort and convenience of the public in the course of everyday

living, (3) is at the very end of the stream of commerce, and (4) the

establishment is not involved in manufacturing.29 These elements re-

ceive attention in the context of particular cases in the next section

of this article.

In order to determine if the establishment is “recognized as retail

in its industry,” courts consider “the well-settled habits of business,

traditional understanding, and common knowledge.”30 Employers

generally rely on the testimony of industry experts to prove this

element.31

Against this statutory and regulatory background, what follows

is a discussion of a selection of the case law interpreting the 7(i)

exemption in various industries.

A Selection of Case Law on the ‘Retail’ Concept of the 7(i) ExemptionBecause it is helpful in attempting to distill an overall theory as to

who is a “retail” employee and who is not, this section is divided

into two sections: cases finding the employee is employed in a retail

establishment (and thus perhaps exempt) and cases finding the

employee is not employed in a retail establishment (and thus certain-

ly nonexempt). The case discussions are tailored to (1) the facts

regarding the products or services the plaintiffs were selling and

(2) an overview of the courts’ analyses. There are other interesting

aspects to many of these cases, but this discussion is largely limited

to the “retail” question.

Cases Finding Employees Employed in a Retail Establishment In Collins v. Horizon Training,32 the plaintiffs sold computer and

technical training to other businesses. First, the court noted that the

defendant sold to the general public and served the everyday needs

36 • THE FEDERAL LAWYER • July 2017

of the community because the defendant sold computer training,

both live and online. The court also observed that the defendant

catered to every level of sophistication, from word processing to pro-

gramming to network systems. In addition, the court found that more

than one-half of households in the United States had a computer, and

the defendant’s services thus served the needs of the general public.

Finally, the court found that the training services occurred at the end

of the stream of commerce. Based on these facts, and in spite of the

fact that the defendant sold its products mainly to other businesses,

the court found that the defendant sold products to the general pub-

lic, it served the day-to-day needs of its community, was at the end of

the stream of commerce, and was, therefore, a retail establishment.33

In La Parne v. Monex Deposit Co.,34 the plaintiffs sold gold and

other precious metals for the defendant. The court found that (1)

the goods were not for resale because they could be held for invest-

ment, and the plaintiffs did not have reasonable cause to believe they

would be resold; (2) the defendant’s business is seen as retail in the

industry; (3) it sells goods to the general public because it adver-

tises on a public website; (4) it serves the everyday, or “basic” or

“integral,” needs of the community because precious metal sales are

made for collecting and investing, which, the court posits, are basic

or integral needs; and (5) the defendant is not involved in manufac-

turing the commodities. For these reasons, the court held that the

employer was a retail establishment.

In Johnson v. Wave Comm GR LLC,35 the plaintiffs were cable

installers who primarily installed cable services in homes. The court

held that the defendant was a retail establishment because (1) the

installers’ sales were analogous to repair technicians listed at 29

C.F.R. § 779.320 (partial list of establishments whose sales or service

may be recognized as retail); (2) the installers are telecommuni-

cations workers according to the Bureau of Labor Statistics, and

the telecommunications industry has a retail concept; and (3) the

defendant sold its services in small quantities to the general public.

In addition, the court found compelling testimony introduced in two

prior cable installer cases about the retail nature of that business.36

In Charlot v. Ecolab Inc.,37 the plaintiffs sold and delivered in-

dustrial cleaning and sanitation products primarily to commercial use

in restaurants, hospitals, etc. The court found that Ecolab’s products

were sold to the general public and that they served the everyday

needs of the community because the ultimate user of the cleaning

and sanitation products was the customer of the businesses to which

Ecolab sold its products. For example, a restaurant patron has a

meal from a plate cleaned with Ecolab’s products. In addition, the de-

fendant adduced undisputed expert testimony that it was recognized

as retail in the industry. Based on these findings, the court held that

Ecolab has a retail concept and is a retail or service establishment.

In Alvarado, the plaintiffs were window washers. The court

found that the defendant “sells window-cleaning services to building

owners and managers; they are the ultimate customers; they do not

resell the window cleaning[,]” even though they may pass the costs

on to tenants. As discussed below, the Alvarado court questioned

whether the Part 779 regulations are useful for § 7(i) because the

two statutes address different issues. Instead, the court reasoned,

“a window washer cannot count on working 40 hours each week for

an entire year. This is the reason for exempting the employer from

the requirement of paying the worker time and a half for overtime.”38

Ultimately, for purposes of the 7(i) exemption, the court held that

the window washers were employed in a retail establishment.

Cases Finding Employees Not Employed in a Retail EstablishmentIn Reynolds v. Wyndham Vacation Resorts,39 the plaintiffs were

inside sales representatives selling time shares for the defendant.

The court held that the defendant time-share company was not a

retail establishment primarily because real estate and apartment

homes are listed in the regulations among the businesses that lack a

retail concept.40

In Parker v. ABC Debt Relief,41 the plaintiffs were salespeople for

a debt negotiation and settlement business. The court held that the

defendant lacked a retail concept. It did so because (1) the defen-

dant sold debt negotiation/settlement products to clients all over

the country (and thus did not serve the needs of the community in

which it was located), and (2) those services are not the type of ser-

vices utilized by the general public in the course of their day-to-day

living, and they do not serve the everyday needs of the community.

Finally, the court noted that the defendant operated from the eighth

and 10th floors of a building in downtown Dallas, and it was thus not

“ordinarily available to the general consuming public.”42 In addition,

the court noted that the defendant’s business was similar to banks,

brokers, credit companies, and loan offices, all of which lack a retail

concept under 29 C.F.R. §779.317.

In Kelly v. A-1 Technology Inc.,43 the plaintiffs sold web design

programming and other web-related services and managed customer

accounts. The court found that the defendant’s customers did not

resell the product. The court held that the defendant lacks a retail

concept because services sold to other commercial businesses must

be the same services offered to the general public. The court points

to gas stations as an example of a service that, while it is sold to

other commercial interests, it is also offered to the general public.

By contrast in this case, “providing personnel to perform services

for other businesses, or performing services such as operating help

desks for corporate clients does not fit the mold of services that are

also provided to members of the general public.”

In addition, the Kelly court distinguished Schwind and Viciedo

(the computer trainer cases discussed above) on the ground that

programming is different from training. In support of this conclusion,

the court cites a DOL opinion letter from Jan. 13, 1994, in which the

DOL held that the sale of sophisticated software to corporate clients

was not a retail activity. Finally, the court rejected the notion that

defendant’s programming services “serves the everyday needs of the

community” because (1) just saying so is inadequate (e.g., banks and

newspapers “serve[] the everyday needs of the community,” but they

still lack a retail concept44) and (2) this implies a “degree of localiza-

tion” that is impossible if the defendant provides services nationwide.

Should the § 213(a)(2) Regulations Be Used in a § 7(i) Case? A Contrary ViewIn the course of concluding that the employer was a retail establish-

ment, in Alvarado (the window washer case), the Seventh Circuit, with

Judge Richard Posner writing, questioned whether the § 213(a)(2)

regulations have any place in a discussion of § 7(i). That is because,

the court says, the two sections are directed at two different ends.

The court points out that, before its repeal, § 213(a)(2) in all of its

original and amended forms was concerned with allowing small,

purely, or primarily intrastate businesses (i.e., mom-and-pop stores)

to avoid liability for minimum wage and overtime.

On the other hand, Congress passed § 7(i) to allow employers to

July 2017 • THE FEDERAL LAWYER • 37

avoid liability for overtime compensation as a result of the neces-

sarily irregular working hours of many commissioned salespeople.

Without the 7(i) exemption, notes the court, an employer may well

end up paying considerably more to an employee who must work

significant overtime in certain, but not all, weeks than if that same

employee worked a consistent 40-hour week. The court provides the

following example and editorial conclusion:

[As a result of the vagaries of weather and bird behavior that

interfere with their ability to work steadily throughout the

year,] a window washer can’t count on working 40 hours each

week for an entire year. This is the reason for exempting his

employer from the requirement of paying the worker time and

half for overtime. Suppose the hourly wage in two separate

businesses is an identical $15. In one business the work is

steady and the worker works 2,000 hours a year ($15 per hour

x 40 hours x 50 weeks = $30,000). There is no overtime, so

no requirement of time and a half pay ($22.50) per overtime

hour. In the other business the worker also works 2,000 hours

a year, but he does no work at all for 10 weeks of the year and

in the remaining 40 weeks (we’re assuming that both workers

take a two-week unpaid vacation) he works 50 hours a week.

Were he entitled to overtime for 10 hours each week for the

40 weeks he works, his total wages for the year would be $15

per hour x 40 hours (= $600) + $22.50 x 10 hours (= $225), a

total of $825 a week, which times 40 weeks equals $33,000. In

this example, both workers work the same number of hours a

year, at the same job, but the one who works irregular hours is

paid 10 percent more. That doesn’t make any sense.45

Alvarado certainly takes the minority position that the § 213(a)(2)

guidance has no place in a § 7(i) case. To the extent that it applies

in any case, however, arguably depends on the circumstances that

occasion the irregular (or, as is the case in may FLSA overtime

cases, regularly long) working hours. If, for example, the employer

encourages its employees to arrive early, stay late, and avoid time off,

those long hours will have had nothing to do with the uncontrollable

extenuating circumstances that the Alvarado court found persua-

sive in concluding that the § 213(a)(2) regulations are not applicable

in a § 7(i) case.

A Broad Theory of Applicability of the ‘Retail’ Label to Certain BusinessesA review of the cases in this area might suggest that there is little

rhyme or reason to how a court will come down on this issue—and

that might be right.

I believe, however, that there is a broad conclusion to be made

here. The key to understanding these cases—and predicting how

a judge will rule on the “retail” question—is to appreciate the

importance of the nature of the products or services the defendant

offers. If the employer’s industry is on (or similar to one on) one of

the lists at 29 C.F.R. § 779.317 or .320 (as in Reynolds) or addressed

in a DOL opinion letter, a court should apply those regulations. If the

employer’s industry is not on one of those lists, then “retail establish-

ment” must sell products or services that directly serve the general

public. In other words, the general public must directly experience

the product or service in their day-to-day lives.

That is, computer training (as in Collins, Viciedo, and Schwind),

sanitized dishes (as in Charlot), spotless windows (as in Alvarado),

precious metals (as in La Parne), and cable services (as in Johnson,

Jones, and Owepetu II), are all experienced directly by the public

in short order after the transaction between the defendant compa-

ny and the defendant’s customer, even if the customer is another

business.

By contrast, web-programming services (as in Kelly) and debt

negotiation services (as in Parker) rarely reach the public in the

direct way that the products and services listed in the previous para-

graph do. More to the point, these non-retail products are consider-

ably further upstream from the concerns of the day to day existence

of the general public to have an impact on “the everyday needs of the

community in which it is located.” While these products may well be

folded into the operations of other businesses, and may well assist

that business in bringing its retail product or service to the commu-

nity, unlike clean silverware and windows, cable television, and a

computer training course, web-programming and debt negotiation

services are very rarely, if ever, directly experienced by the general

public in their day-to-day lives.46

In short, in light of the seemingly haphazard array of case law,

the factual focus for this inquiry should be whether the employer’s

products serve the everyday needs of the community in which the

establishment is located. If the public experiences those products

directly, then the case law discussed above suggests that it is proba-

bly a “retail” establishment. If, on the other hand, the public does not

experience them, there is a compelling argument that the employer

does not employ the employee in a “retail” establishment.

Edmond Moreland has been a Texas plain-tiff-side employment lawyer since he began practicing in 1997. During that time, he has represented working people asserting a wide variety of claims in federal and state courts, at both the trial and appellate levels. Moreland is board certified in labor and employment law by the Texas Board of Legal Specialization.

Endnotes1 Fair Labor Standards Act, 29 U.S.C. §§ 201-219 (2012).2 29 U.S.C. §§ 206(a)(1) and 207(a)(1) (2012); Integrity Staffing

Solutions Inc. v. Busk, 574 U.S.___, 135 S.Ct. 513, 516 (2014). 3 See, e.g., 29 U.S.C. § 213 (2012); 29 C.F.R. §541.100-.500 (2011).4 29 C.F.R. §779.414.5 As with other FLSA exemptions, it falls to the employer to prove

the employee is exempt from overtime under § 7(i). See, e.g., Idaho

Sheet Metal Works Inc. v. Wirtz, 383 U.S. 190, 206 (1966), citing

Arnold v. Ben Kanowsky Inc., 361 U.S. 388, 392 (1960).6 29 U.S.C. § 207(i) (2012).7 The 7(i) exemption is, strictly speaking, an exemption only from

the overtime requirements of the Act, and not an exemption from

the minimum wage requirement. However, it also has a built-in

requirement that the employee’s compensation exceed the minimum

wage.8 See 29 C.F.R. § 779.417(a) (2002): “The act does not define a

representative period, but plainly contemplates a period which

can reasonably be accepted by the employer, the employee,

and disinterested persons as being truly representative of the

compensation aspects of the employee’s employment on which

38 • THE FEDERAL LAWYER • July 2017

this exemption test depends. A representative period within the

meaning of this exemption may be described generally as a period

which typifies the total characteristics of an employee’s earning

pattern in his current employment situation, with respect to the

fluctuations of the proportion of his commission earnings to his total

compensation.” 9 See 29 C.F.R. § 779.416 (2002).10 While there is a difference in judicial deference between regulations

and interpretive bulletins, and while Part 779 is an interpretive

bulletin, for ease of reference, this article will refer to Part 779 as

a “regulation.” Compare Skidmore v. Swift & Co., 323 U.S. 134,

140 (1944) (“We consider that the rulings, interpretations and

opinions of the administrator under this act, while not controlling

upon the courts by reason of their authority, do constitute a body

of experience and informed judgment to which courts and litigants

may properly resort for guidance.”) with Chevron USA Inc. v.

Natural Res. Def. Council Inc., 467 U.S. 837, 843-44 (1984) (“We

have long recognized that considerable weight should be accorded

to an executive department’s construction of a statutory scheme it is

entrusted to administer….”).11 29 C.F.R. § 779.300-.388 (2002); see, e.g., Casanova v. Gold’s

Texas Holding Grp. Inc., 2016 WL 1241548, *4-*5 (W.D. Tex. 2016);

Charlot v. Ecolab Inc., 136 F. Supp. 3d 433, 457-58 (S.D.N.Y. 2015);

Parker v. ABC Debt Relief, 2013 WL 371573, *8 (N.D. Tex. 2013);

Kelly v. A-1 Tech. Inc., 2010 WL 1541585, *10-*11 (S.D.N.Y. 2010);

but see Alvarado v. Corporate Cleaning Servs. Inc., 782 F.3d 365,

369-70 (7th Cir. 2015).12 See Kelly, 2010 WL 1541585 (providing an excellent legislative

history of §§ 7(i) and 213(a)(2)).13 See S. Rep. 145, 87th Cong., first session, p. 27; H.R. 75, 87th Cong.,

first session p. 9; 29 C.F.R. § 779.24 (2002).14 Alvarado, 782 F.3d at 369-70 (7th Cir. 2015) (“the [congressional]

reports are not the law and don’t explain why a definition meant for

the intrastate business exemption [§13(a)(2)] should also apply to

the commission exemption [§7(i)]; the two provisions serve different

purposes.”).15 Casanova, 2016 WL 1241548 at *4; citing Parker, 2013 WL

371573 at *8, and 29 C.F.R. § 779.313 (2002).16 Casanova, 2016 WL 1241548 at *4.17 Johnson v. Wave Comm GR LLC, 4 F. Supp. 3d 423, 436 (N.D.N.Y.

2014), citing Idaho Sheet Metal Works, 383 U.S. at 204-05.18 29 C.F.R. §779.303 (2002).19 See 29 C.F.R. §779.319 (2002); Charlot, 136 F. Supp. 3d at 459-60

(holding that a company that is available by telephone and internet is

an “establishment” within the meaning of § 7(i)); citing Kelly, 2010

WL 1541585 at *13; English v. Ecolab Inc., 2008 WL 878456, *10

(S.D.N.Y. 2008).20 29 C.F.R. § 779.303 (2002).21 Kelly, 2010 WL 1541585 at *17, citing 29 C.F.R. § 779.314 (2002).22 Idaho Sheet Metal Works, 383 U.S. at 204; see also 29 C.F.R. §

779.318(b) (2002) (same); but see English, 2008 WL 878456 at *8,

citing 29 C.F.R. § 779.318(b) (2002) (“The legislative history of the

§ 213(a)(2) exemption for certain retail or service establishments

shows that Congress also intended that the retail exemption

extend in some measure beyond consumer goods and services to

embrace certain products almost never purchased for family or

noncommercial use.”).23 29 U.S.C. § 203(k) (2012); 29 C.F.R. § 779.331 (2002); see also

Christopher v. Smith Kline Beecham Corp., 567 U.S. 142, 132 S.Ct.

2156, 2165-73 (2012). 24 29 C.F.R. § 779.331 (2002). 25 Id.26 See Johnson, 4 F. Supp. 3d at 436, citing Kelly, 2010 WL 1541585

at *11, and 29 C.F.R. § 779.316, .322 (2002). 27 29 C.F.R. § 779.317, .320 (2002).28 For example, the DOL has issued opinion letters regarding software

companies, athletic clubs, carpet and upholstery cleaning services,

and plumbing services and supply companies.29 Charlot, 136 F. Supp. 3d at 468, citing 29 C.F.R. § 779.318(a)

(2002), and Johnson, 4 F. Supp. 3d at 440.30 29 C.F.R. §779.328(a) (2002).31 See, e.g., Charlot, 136 F. Supp. 3d at 469-70; Johnson, 4 F. Supp.

3d at 440-41.32 Collins v. Horizon Training, 2003 WL 22388448 (N.D. Tex. 2003).33 See also, Viciedo v. New Horizons Computer Learning Ctr., 246

F. Supp. 2d 886 (S.D.Ohio 2003) (holding that a computer training

company is a retail establishment); Schwind v. EW & Assocs., 371

F. Supp. 2d 560 (S.D.N.Y. 2005) (same, based in large part on the

importance of computing in day-to-day living); but see Martin v.

Refrigeration Sch. 968 F.2d 3, 9 (9th Cir. 1992) (holding that a trade

school was not a retail establishment, but rather a “manufacturer”

because the school’s products were graduates who went out into the

world to serve society).34 La Parne v. Monex Deposit Co., 714 F. Supp. 2d 1035 (C.D. Cal.

2010).35 Johnson, 4 F. Supp. 3d at 423.36 Those cases are Jones v. Tucker Comms. Inc. 2013 WL 6072966

(M.D. Ga. 2013) and Owopetu v. Nationwide CATV Auditing

(“Owopetu II”), 2011 WL 4433159 (D. Vt. 2011). In both Jones and

Owopetu II, the courts also held that cable installation companies

were retail establishments.37 Charlot, 136 F. Supp. 3d 433.38 782 F.3d at 369, citing Yi v. Sterling Collision Ctrs. Inc., 480 F.3d

505, 510 (7th Cir. 2007); Mechmet v. Four Seasons Hotels Ltd., 825

F.2d 1173, 1176-77 (7th Cir.1987); and Gieg v. DDR Inc., 407 F.3d

1038, 1045-46 (9th Cir. 2005).39 Reynolds v. Wyndham Vacation Resorts, 2016 WL 362620

(D.S.C., Jan. 29, 2016).40 See 29 C.F.R. § 779.317 (2002).41 Parker, 2013 WL 371573.42 Citing 29 C.F.R. § 779.3181.43 Kelly, 2010 WL 1541585.44 Citing H.R. Rep. 81-1453, pp. 25-26.45 Alvarado, 782 F.3d at 369.46 To add another layer here, if the employer sells its products

nationwide (and thus outside the community in which it is located),

that factor may also weigh in favor of a finding that the employer

lacks a “retail” concept. At least two courts have found this factor to

weigh against a finding that the establishment has a retail concept

because such an establishment cannot “serve … the community in

which it is located.” In Parker, the court noted that the defendant

sold its products nationwide; and in Kelly, the court went a step

further to note that the defendant’s web-programming services

lacked a “degree of localization” required to meet the needs of the

community.

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