803 KAR 1:075. Exclusions from minimum wage and overtime

Link to law: http://www.lrc.ky.gov/kar/803/001/075.htm
Published: 2015

      803 KAR 1:075. Exclusions from minimum

wage and overtime.

 

      RELATES TO: KRS 337.275, 337.285

      STATUTORY AUTHORITY: KRS 337.295

      NECESSITY, FUNCTION, AND CONFORMITY: KRS

337.010 excludes certain types of employees from being subject to the minimum

wage and overtime provisions of the act and KRS 337.285 excludes certain

employees from its coverage. The function of this administrative regulation is

to define these exclusions. These definitions will guide the office in carrying

out its responsibilities under the law and assist employers who may be

concerned with the provisions of the law in understanding their obligations

under the law.

 

      Section 1. Definitions. (1) The term

"retail store or service industry" shall mean an establishment

seventy-five (75) percent of whose 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.

      (2) The term "hotel" means an

establishment known to the public as a hotel, which is primarily engaged in

providing lodging or lodging and meals for the general public. Included are

hotels operated by membership organizations and open to the general public and

apartment hotels which provide accommodations for transients. However, an

establishment whose income is primarily from providing a permanent place of

residence or from providing residential facilities complete with bedrooms and

kitchen for prolonged periods would not be considered a hotel.

      (3) The term "motel" means an

establishment which provides services similar to that of a hotel described in

subsection (2) of this section, but which caters mostly to the motoring public,

providing it with motor car parking facilities either adjacent to the room or

cabin rented or at some other easily accessible place. Included in the term

"motel" are those establishments known to the public as motor hotels,

motor lodges, motor courts, motor inns, tourist courts, and tourist lodges.

      (4) The term "restaurant" means

an establishment which is primarily engaged in selling and serving to

purchasers at retail prepared food and beverages for consumption. This includes

such establishments commonly known as lunch counters, refreshment stands,

cafes, cafeterias, coffee shops, diners, dining rooms, lunch rooms, or tea

rooms. The term "restaurant" does not include drinking

establishments, such as bars or cocktail lounges, whose sale of alcoholic

beverages exceed the receipts from sales of prepared foods and nonalcoholic

beverages or establishments offering meal service on a boarding or term basis

or providing such service only as an incident to the operation of a business of

another kind and primarily to meet institutional needs for continuing meal

service to persons whose continued presence is required for such operation,

such as a boarding house, dining facilities of a boarding school, college or

university which serves its students and faculty, lunchroom facilities for

private and public day school students, and other institutional food service

facilities providing long-term meal service to stable groups of individuals as

an incident to institutional operations in a manner wholly dissimilar to the

typical transactions between a restaurant and its customers.

      (5) "Excise taxes" are taxes

levied on the manufacture, sale or consumption of a commodity, and taxes levied

on license to pursue certain occupations and corporate privileges.

 

      Section 2. Hotel or Motel. The primary

function of a hotel or motel, is to provide lodging facilities to the public.

In addition, most hotels or motels provide food for their guests and many sell

alcoholic beverages. These establishments also may engage in some minor revenue

producing activities; such as, the operation of valet services offering

cleaning and laundering service for the garments of their guests, news stands,

hobby shops, renting out of their public rooms for meetings, lectures, dances,

trade exhibits and weddings. The exemption provided for hotels and motels in

KRS 337.010(2)(a)(vi) and KRS 337.285 will not be defeated simply because a

hotel or a motel engages in all or some of these activities, if it is primarily

engaged in providing lodging facilities, food and drink to the public.

 

      Section 3. Exemptions from Minimum Wage

and Overtime. (1) Employees of retail stores, service industries, hotels,

motels, and restaurant operations whose average annual gross volume of sales

made for business done is less than $95,000 for the five (5) preceding years

exclusive of excise taxes at the retail level are exempt from both the minimum

wage and overtime provisions of the act.

      (2) To qualify for this exemption, the

establishment must be recognized as retail in the particular industry.

Typically a retail or service establishment is one which sells goods or

services to the general public. It serves the everyday needs of the community

in which it is located. The retail or service establishment performs a function

in the business organization which is at the very end of the stream of distribution,

disposing in small quantities of the products and skills of such organization

and does not take part in the manufacturing process.

      (3)(a) To compute the average annual

gross volume of sales made for business done, it will be necessary for the

business to add all the sales made for business done for the five (5) preceding

years, exclusive of excise taxes at the retail level, and divide by five (5).

If this average is less than $95,000, the establishment would be exempt.

      (b) If the establishment has been in

business for less than five (5) years, the gross sales will be totaled for the

years the establishment has been in business and divided by the number of

years. If this average is less than $95,000, the establishment would be exempt.

      (c) If the establishment has been in

business for less than one (1) year, the gross sales will be totaled for the

number of months the establishment has been in business and divided by the

number of months. This amount will then be multiplied by twelve (12). If this

amount is less than $95,000, the establishment would be exempt.

      (d) Excise taxes at the retail level are

not computed in totaling the gross volume of sales. Excise taxes which are

levied at the manufacturer's, wholesaler's or other distributive level will not

be excluded in calculating the dollar volume of sales.

 

      Section 4. Exemptions from Overtime. (1)

Employees of retail stores whose principal duties are connected with the

selling, purchasing, and distributing of goods and employees of a restaurant,

hotel and motel operation; any employee with respect to whom the Secretary of

Transportation has power to establish qualifications and maximum hours of

service pursuant to the provisions of section 204 of the Motor Carrier Act,

1935; any salesman, parts man, or mechanic primarily engaged in selling or

servicing automobiles, trucks, or farm implements, if he is employed by a

nonmanufacturing establishment primarily engaged in the business of selling

such vehicles or implements to ultimate purchasers; or any salesman primarily

engaged in selling trailers, boats, or aircraft, if he is employed by a

nonmanufacturing establishment primarily in the business of selling trailers,

boats, or aircraft to ultimate purchasers; and any driver employed by an employer

engaged in the business of operating taxi cabs or to employees whose function

is to provide twenty-four (24) hour residential care on the employer's premises

in a parental role to children who are primarily dependent, neglected and

abused and who are in the care of private nonprofit child caring facilities

licensed by the Cabinet for Health and Family Services under KRS Chapter 199,

are exempt from the overtime provisions of KRS 337.285.

      (2) Employees of a retail store whose

principal duties are not connected with the selling, purchasing, and

distributing of the goods will not be considered as exempt employees, nor will

employees of a service establishment which does not sell goods, but is in the

business of selling a service. (LAB-11; 1 Ky.R. 256; eff. 1-8-75; Am. 2 Ky.R.

600; 3 Ky.R. 301; eff. 8-4-76; 9 Ky.R. 42; eff. 8-11-82; TAm eff. 8-9-2007.)
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